Central Business Registration No. 29 91 87 91
Annual Report 2023
(January 1 – December 31)
Adopted at the Annual General Meeting of Shareholders on May 30, 2024.
Chairman of the General Meeting
2
Contents
Company Information ..............................................................................................................................................
3
Statement by Management on the Annual Report ..............................................................................................
4
Independent Auditor’s Report ................................................................................................................................
6
Management Commentary .....................................................................................................................................
8
Statements of Profit or Loss and Other Comprehensive Income for the Years Ended December 31 ........
37
Statements of Financial Position as of December 31 .........................................................................................
38
Statements of Changes in Equity - Group ............................................................................................................
39
Statements of Changes in Equity - Parent ...........................................................................................................
40
Cash Flow Statements for the Year Ended December 31 .................................................................................
41
Notes to the Financial Statements ........................................................................................................................
42
Company Information
3
Company Information
Ascendis Pharma A/S
Tuborg Boulevard 12
DK-2900 Hellerup
Central Business Registration No. 29 91 87 91
Registered in: Gento fte
Phone: +45 70 22 22 44
Internet: www.asc endispharma.com
E-mail: info@asc endispharma.com
Board of Directors
Albert Cha, Chairman
Lisa Jane Morrison
Jan Møller Mikkelsen
Lars Holtug
Siham Imani
William Carl Fairey Jr.
Executive Board
Jan Møller Mikkelsen, Chief Executive Officer
Scott Thomas Smith, Chief Financial Officer
Michael Wolff Jensen, Chief Legal Officer
Anni Lotte Kirstine Pedersen, Chief Administration Officer
External Auditors
Deloitte Statsautoriseret Revisionspartnerselskab
Statement by Management on the Annual Report
4
Executive Board
Board of Directors
Statement by Management on the Annual Report
5
Independent Auditor’s Report
6
Independent Auditor’s Report
7
Business Registration No 33 96 35 56
Identification No (MNE) 34532
Identification No (MNE) 24828
Financial Statements
8
Management Commentary
Unless the context otherwise requires, references to the “Company,” “Group,” “we,” “us” and “our” refer to
Ascendis Pharma A/S and its subsidiaries.
Information and disclosure specifically addressing the parent company Ascendis Pharma A/S are described
separately in the notes. Additionally, references to “Ascendis Pharma A/S” and “Parent Company” solely refer
to the parent company Ascendis Pharma A/S.
Consolidated Key Figures
2023
2022
2021
2020
2019
(EUR’000)
Revenue
266,718
51,174
7,778
6,953
13,375
Operating Profit/(Loss)
(455,541
)
(561,814
)
(451,792
)
(330,620
)
(226,719
)
Finance Income/(Expenses)
(208
)
1,694
55,807
(79,030
)
16,582
Profit/(Loss) for the Year
(481,447
)
(583,194
)
(383,577
)
(418,955
)
(218,016
)
Cash and Cash Equivalents
392,164
444,767
446,267
584,517
598,106
Total Assets
825,587
1,089,738
1,084,921
979,793
676,732
Equity
(145,697
)
263,348
883,635
838,711
597,114
Investments in Property, Plant & Equipment
2,442
14,489
23,704
19,860
5,159
Return on Equity (%)*
(818.4
)
(101.7
)
(44.5
)
(58.4
)
(49.7)
Equity Ratio (%)*
(17.6
)
24.2
81.4
85.6
88.2
*Key ratios are calculated as follows:
Return on Equity: (Profit / (Loss) for the Year x 100) / Average Equity
Equity Ratio: (Equity x 100) / Total Assets
Ascendis Pharma in Brief
We are applying our innovative TransCon technology platform to build a leading, fully integrated 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 Organization
Certain of our operations are conducted through our following wholly-owned subsidiaries:
Wholly-owned subsidiaries
Domicile
Ascendis Pharma GmbH
Germany
Ascendis Pharma Endocrinology GmbH
Germany
Ascendis Pharma, Inc.
USA
Ascendis Pharma Endocrinology, Inc.
USA
Ascendis Pharma Ophthalmology Division A/S
Denmark
Ascendis Pharma Endocrinology Division A/S
Denmark
Ascendis Pharma Bone Diseases A/S
Denmark
Ascendis Pharma Growth Disorders A/S
Denmark
Ascendis Pharma Oncology Division A/S
Denmark
Ascendis Pharma Nordics A/S
Denmark
Ascendis Pharma Europe A/S
Denmark
Ascendis Pharma UK Limited
United Kingdom
Ascendis Pharma Iberia S.L.
Spain
The Company has increased its number of employees to 879 at the end of 2023 compared to 797 at the end
of 2022. Employees engaged with research and development have increased primarily due to advancement
of our pipeline of endocrinology and oncology. In addition, the number of employees has increased due to pre-
launch and launch activities, and extension of corporate functions to support those activities.
Financial Statements
9
Our Vision
As announced in January 2024, Vision 2030 is our vision to achieve blockbuster status for multiple products
and expand our engine for future innovation. This includes:
• Be the Leading Endocrinology Rare Disease Company
Achieve blockbuster status (>$1B) for each of TransCon PTH, TransCon hGH, and TransCon
CNP through worldwide commercialization
Be the leader in growth disorders and hypoparathyroidism, pursuing clinical conditions,
innovative life cycle management, and complementary patient offerings
Expand pipeline with Endocrinology Rare Disease blockbuster product opportunities.
• Create Value in Additional Therapeutic Areas through Innovative Business Models
Obtain accelerated approval in oncology with registrational trials ongoing;
Pursue TransCon product opportunities in >$5B indications
Maximize value creation of these product opportunities through collaboration with therapeutic
area market leaders
• Differentiate with Ascendis Fundamentals
Outperform industry drug development benchmarks with Ascendis’ product innovation
algorithm
Remain independent as a profitable biopharma through lean and flexible ways of working
Let our values Patients, Science, Passion drive our decisions to success
Our products and product candidates combine our TransCon technologies with clinically validated parent drugs
and pathways, with the goal of optimizing efficacy, safety, tolerability and convenience.
We apply these technologies in combination with clinically validated parent drugs or pathways using our
algorithm with the goal of creating product candidates with the potential to be best-in-class. We plan to apply
this algorithm for product innovation to expand our pipeline with Endocrinology Rare Disease product
opportunities in large addressable markets. In addition, our vision is to pursue TransCon product opportunities
in >$5B indications in other therapeutic areas and maximize value creation of these product opportunities
through collaboration with therapeutic area market leaders. We believe our approach to product innovation
may reduce the risks associated with traditional drug development.
Ascendis Algorithm for Product Innovation
When we apply our TransCon technologies 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 illustrated above, our algorithm for product innovation focuses
on identifying indications that have an unmet medical need, have a clinically validated parent drug or pathway,
are suitable to our TransCon technologies, have potential for creating a clearly differentiated product, have a
potential established development pathway, and have the potential to address a large market.
Financial Statements
10
We currently have two marketed products and a diversified portfolio of five product candidates in clinical
development in the areas of endocrinology rare diseases and oncology, and we are working to apply our
TransCon technology platform in additional therapeutic areas such as the glucagon-like peptide 1 (“GLP-1”)
class where we believe we have designed a best-in-class, once-monthly program.
• SKYTROFA – Our first marketed product is SKYTROFA
®
(lonapegsomatropin-tcgd), developed as
TransCon Growth Hormone (“TransCon hGH”), which received regulatory approval in the United
States for the treatment of pediatric patients one year and older who weigh at least 11.5 kg and
have growth failure due to inadequate secretion of endogenous growth hormone, also known as
growth hormone deficiency (“GHD”). TransCon hGH is now commercially available for prescription
in the United States under its brand name SKYTROFA (lonapegsomatropin-tcgd). In addition,
TransCon hGH was granted marketing authorization in the European Union (“EU”) as SKYTROFA
(lonapegsomatropin), 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. SKYTROFA has been commercially available for prescription in Germany since
September 2023.
• YORVIPATH – Our second marketed product is YORVIPATH
®
(palopegteriparatide), developed as
TransCon PTH. In the EU, YORVIPATH was granted marketing authorization as a once-daily
subcutaneous injection for the treatment of adults with chronic hypoparathyroidism. YORVIPATH
has been commercially available for prescription in Germany and Austria since January 2024.
• Endocrinology Rare Disease Pipeline – We are developing three product candidates in our
Endocrinology Rare Disease portfolio spanning multiple indications and geographies. These
include TransCon hGH for pediatric GHD, adult GHD, and Turner syndrome; TransCon PTH for
adults with chronic hypoparathyroidism; and TransCon CNP (navepegritide) for infants and children
with achondroplasia.
• Oncology – In Oncology, we are leveraging our TransCon technologies with the goal of enhancing
the anti-tumor effects of clinically-validated parent drugs and pathways and to provide sustained
modulation of tumor microenvironments and activate cytotoxic immune cells. We have initiated
clinical development of two product candidates: TransCon TLR7/8 Agonist, an investigational, long-
acting prodrug of resiquimod, a small molecule agonist of Toll like receptors (“TLR”) 7 and 8 for
intratumoral delivery and TransCon IL-2 /, for systemic delivery, which is designed for prolonged
exposure to an IL-2 variant that selectively activates the IL-2 /, with minimal binding to IL-2Rα.
Our clinical development program for these product candidates also includes evaluation of them as
a potential combination therapy.
• Ophthalmology - In January 2023, we announced Ophthalmology as our third independent
therapeutic area of focus for our TransCon technologies. In January 2024, we announced the
formation of Eyconis, Inc., with institutional investors and entered into an exclusive license
agreement with Eyconis to develop and commercialize TransCon ophthalmology products globally.
We received an equity position in the newly formed company, and we are eligible to receive future
milestone payments plus single digit royalties on global net sales of commercialized products, if
any.
Financial Statements
11
TransCon Product Candidates Pipeline
1. riGHt Trial (jRCT2031200340)
2. foresiGHt Trial (NCT05171855)
3. New InsiGHts Trial (NCT05690386)
4. NDA resubmitted to U.S. FDA, PDUFA goal date May 14, 2024
5. PaTHway Japan Trial (jRCT2051210058)
6. Pivotal ApproaCH Trial (NCT05598320)
7. reACHin Trial (NCT06079398)
8. transcendIT-101 Trial (NCT04799054), includes 4 indication-specific cohorts
9. BelieveIT-201 Trial (NCT05980598)
10. IL-Believe Trial (NCT05081609)
We maintain an intellectual property portfolio comprising over 300 issued patents and over 550 patent
applications as of December 31, 2023, which includes patents and patent applications applicable to our product
candidates with claims directed to composition of matter, process, formulation and/or methods-of-use for our
product candidates, including a product-specific device and core TransCon technologies. Other than the rights
we have granted to VISEN Pharmaceuticals (“VISEN”), Teijin Limited, and Eyconis as noted in this annual
report, we hold worldwide rights to our TransCon technologies and, other than our royalty financing
arrangement with Royalty Pharma as noted in this annual report, we owe no third-party royalty or milestone
payment obligations with respect to our TransCon technologies, TransCon hGH or any of our other product
candidates. While our TransCon prodrugs may incorporate already approved parent drugs, TransCon hGH
and each of our other product candidates are new molecular entities and therefore eligible to be granted new
intellectual property rights, including new composition of matter patents.
Global Commercialization Strategy
We are establishing a global presence to commercialize TransCon product candidates, if approved, to address
patients' unmet medical needs.
In the U.S., we have established a multi-faceted organization to support the ongoing commercialization of
SKYTROFA, which will also serve as the foundation for future Endocrinology Rare Disease product launches
in the U.S.
Financial Statements
12
In Europe, we are expanding our presence by building integrated organizations in select countries, which we
call Europe Direct, beginning with Germany, where we have launched SKYTROFA and YORVIPATH. We are
establishing other Europe Direct organizations to service country clusters, including DACH (Germany, Austria,
Switzerland), France & BeNeLux (Belgium, the Netherlands, and Luxembourg), Iberia (Portugal and Spain),
Italy, Nordics (Denmark, Norway, Sweden, Iceland, Finland), and the United Kingdom & Ireland.
Beyond the U.S. and Europe Direct, we are expanding global reach for our Endocrinology Rare Disease
programs through exclusive distribution agreements with geographic market leaders, which we call
International Markets. We have three such regional agreements established as of January 2024:
• Specialised Therapeutics Asia Pte Ltd. (Australia, New Zealand, Singapore, Malaysia, Brunei,
Thailand, and Vietnam)
• Er-Kim (Central & Eastern Europe and Turkey)
• Vector Pharma FZCO (Saudi Arabia, United Arab Emirates, Kuwait, Oman, Qatar, and Bahrain)
Finally, we are making our products commercially available in select markets through exclusive license
agreements with partners with local expertise and infrastructure. We plan to also make our product candidates
commercially available, if approved, through these exclusive license agreements. In China, VISEN has
exclusive license rights to develop and commercialize TransCon hGH, TransCon PTH, and TransCon CNP.
In Japan, Teijin has exclusive license rights to develop and commercialize TransCon hGH, TransCon PTH,
and TransCon CNP.
Financial Statements
13
TransCon Technologies
Overview
Our TransCon technologies are 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 highly differentiated product candidates 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 safety and efficacy, increase the likelihood of clinical development success,
and provide intellectual property benefits.
TransCon molecules can have up to 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 Technology Components
TransCon Carriers
Our TransCon technologies incorporate two carrier platforms that can be used to provide sustained localized
or systemic drug exposure. These biocompatible carrier platforms include our TransCon systemic carriers and
TransCon localized carriers (self-eliminating hydrogels). Our carriers inactivate and protect the drug through
a shielding effect, which may prevent rapid excretion and degradation of the parent drug and enable benefits
that include improved injection site tolerability, reduced systemic adverse effects, and low immunogenicity.
• Systemic – Our TransCon systemic carriers are used to provide systemic drug exposure and are
based on soluble compounds such as methoxy polyethylene glycol (“mPEG”) or other natural or
synthetic polymers. Prodrugs created using our systemic carriers are readily absorbed into the
bloodstream after administration, thus minimizing exposure of the subcutaneous tissue to active
drug, which we believe may improve injection site tolerability. TransCon hGH, TransCon PTH, and
TransCon CNP utilize mPEG as a carrier molecule. mPEG is widely used to improve the
pharmacokinetic or pharmacodynamic properties of marketed therapeutics. Below is an illustration
of our systemic carrier:
Financial Statements
14
• Localized – Our TransCon localized carriers include TransCon hydrogels based on PEG, hyaluronic
acid, or other biopolymers. TransCon hydrogel is designed to self-eliminate to soluble,
biocompatible molecules after the drug payload has been released. When applied for localized
delivery, the TransCon hydrogel enables the release of a parent drug at high local concentrations
within the target area while minimizing systemic exposure. We believe this may widen the
therapeutic window for parent drugs that suffer from significant systemic side effects and toxicities,
facilitating the development of highly efficacious product candidates with improved safety and
tolerability profiles. Below is an illustration of our hydrogel carrier:
• In 2023, we developed a novel TransCon prolongation technology. The new TransCon technology
may support expansion of TransCon technology into new therapeutic areas.
TransCon Linkers
Our reversible TransCon linkers are designed to enable the transient conjugation of a broad range of
therapeutics, including proteins, peptides and small molecules, to our TransCon carriers. We have a large
library of TransCon linkers that may be applicable to various types of parent drugs, and that can be tailored to
potentially achieve half-life extension enabling daily, weekly, monthly, and half-yearly dosing and to customize
the potential pharmacokinetic profile for each individual product candidate with the goal of optimizing the
potential therapeutic effect. TransCon linkers are self-cleaving through a process called intra-molecular
assisted cleavage, which causes the linker to release the unmodified parent drug. We can tailor the release
properties of the linker to a given therapeutic indication and parent drug by modifying the linker structures. We
believe the self-cleaving process of our linker avoids many of the shortcomings of conventional prodrug
technologies, which often depend on metabolic processes, such as enzymatic degradation, to convert the
prodrug into the active drug. The rate of metabolic conversion of prodrugs in these types of processes may
differ between patients, and even within different tissues in the same patient. As a result, conventional prodrugs
do not always offer predictable release of the parent drug. Our TransCon linkers are designed to predictably
release an unmodified active parent drug at predetermined rates governed by physiological pH and
temperature conditions, which are tightly regulated in the body. Consequently, we believe we can design our
prodrugs to release the unmodified parent drug at predictable rates.
Parent Drugs
Our TransCon technologies are applicable across a broad range of therapeutic classes and are currently used
to create potentially best-in-class long-acting product candidates based on proteins, peptides and small
Financial Statements
15
molecules. By primarily focusing on biological targets that have been clinically validated, we can leverage
available knowledge regarding a target’s activity. Based on this selective approach, we know what drug levels
must be maintained in the body for optimal efficacy and safety, and we can design the release half-life and
dosing frequency of our TransCon prodrugs to maintain these levels to achieve the desired pharmacological
effect. We move a product candidate into development after it demonstrates the desired profile in non-clinical
models. Furthermore, based on the established translational relationships between preclinical animal models
and clinical efficacy, we believe experimental results generated in animal models are highly predictive of
clinical results and reduce the development risk for our TransCon prodrugs. This strategy is designed to reduce
risk and increase productivity.
This approach has enabled us to generate a pipeline of product candidates to address significant unmet
medical needs and to become potential sources of significant revenue for our company. Because our
TransCon technologies leverage clinically validated parent drugs or pathways, we believe we may benefit from
a higher development and regulatory success rate compared to development of drug compounds without
established biology.
TransCon Products – Endocrinology Rare Disease
TransCon Growth Hormone (hGH)
Market Opportunity in Recombinant Human Growth Hormone
Growth hormone deficiency (“GHD”) is a serious orphan disease that affects both children and adults. Children
with GHD are characterized by short stature, metabolic and cardiovascular abnormalities, cognitive
deficiencies, and poor quality of life. GHD in adults is associated with increased adiposity, or fat mass, as well
as psychiatric-cognitive, cardiovascular, muscular, metabolic and skeletal abnormalities. The current standard
of care for GHD is daily subcutaneous injections of somatropin, a recombinant human growth hormone
(“hGH”). In childhood and adolescence, growth hormone plays an essential role in normal longitudinal growth,
muscle and bone strength, and distribution of body fat. In adults, growth hormone contributes to body
composition, cardiovascular function, and bone health. These daily hGH therapies have been shown to be
safe and well-tolerated.
In both therapy-compliant children and adults with GHD, daily subcutaneous injections of hGH have resulted
in improved body composition parameters, bone density, cardiovascular outcomes and quality of life. Growth
hormone-deficient children who are fully adherent to their daily hGH treatment regimen may achieve a height
in adulthood that is comparable to that of their family members and national norms.
Despite the demonstrated benefits of daily hGH therapy, many GHD patients are not adequately treated and
adherence continues to be a challenge, as reported in a 2021 paper published by Kaplowitz et al. in the Journal
of Managed Care and Specialty Pharmacy. The observational retrospective cohort analysis utilized
administrative claims data from two databases on over 20,000 pediatric patients diagnosed with GHD.
Approximately 68% of commercial patients and approximately 63% of Medicaid patients received daily growth
hormone treatment, whereas approximately 32% of commercial patients and approximately 37% of Medicaid
patients were untreated. In addition, mean adherence as measured by proportions of days covered which is
defined as the number of days covered by any daily growth hormone prescription during the follow-up period
was approximately 60% in the commercial cohort and approximately 50% in the Medicaid cohort. Only 32% of
commercial and 18% of Medicaid patients reported adherence rates greater than 80%.
Financial Statements
16
For adult patients with GHD, underdiagnosis and undertreatment are also a concern. Untreated adult GHD
patients can experience reduced quality of life and increased risk of morbidity and mortality. A retrospective
cohort study presented at ENDO 2023 analyzed an electronics health records database and selected adult
patients with suspected AGHD. Of the 51,588 patients with suspected AGHD, fewer than 4% were treated with
growth hormone.
Since the introduction of hGH in 1981, a number of the world’s largest pharmaceutical companies have
developed and marketed daily-administered hGH products. All currently marketed daily hGH products in the
United States – Norditropin
®
(Novo Nordisk A/S), Humatrope
®
(Eli Lilly and Company), Nutropin AQ
®
(Genentech, a Roche company), Genotropin
®
(Pfizer Inc.), Zomacton
®
(Ferring Pharmaceuticals, Inc.) and
Omnitrope
®
(Sandoz GmbH) – contain unmodified somatropin (hGH) and are administered by subcutaneous
injections. The global market for daily hGH products is largely composed of products from Novo Nordisk, Pfizer,
Eli Lilly, Sandoz, Merck KGaA, and Roche, which together account for most of the global market share.
Primary indications for hGH in children are GHD, idiopathic short stature, chronic kidney disease, Prader-Willi
syndrome, small for gestational age, and Turner syndrome. In adults, primary indications for hGH include GHD
and AIDS-induced weight loss. We estimate pediatric indications comprise up to 90% of the current total hGH
market, of which approximately half is for pediatric GHD.
Competitive Landscape for Long-Acting Growth Hormone Therapies
Since the 1990s, the pharmaceutical industry has employed various approaches to develop long-acting growth
hormone products to reduce the burden of daily injections on patients and increase patient compliance with
the dosing regimen. These approaches generally fall into two categories: unmodified somatropin (hGH) and
permanent modification of growth hormone:
• Unmodified somatropin (hGH): Two long-acting growth hormone products using encapsulation
technologies previously received regulatory approval in the U.S. and Europe but were subsequently
discontinued due to commercial challenges. These include Nutropin Depot
®
, formerly marketed by
Genentech, and Somatropin Biopartners, developed by LG Life Sciences and Biopartners GmbH.
Nutropin Depot was approved in 1999 and later withdrawn; Somatropin Biopartners (LB03002),
was approved by the European Medicines Agency (“EMA”) in 2013, and later withdrawn. We
believe that the lack of market acceptance was a result of the various safety and tolerability issues
that tend to arise with encapsulation technologies.
• Permanent modification of growth hormone: Modification technologies prolong activity in the body
by creating analogs of growth hormone through permanent modification of the growth hormone
molecule. This modification may alter the molecular size and interaction with the growth hormone
receptor and/or change the natural association affinity to endogenous proteins, as well as the
distribution in the body. These changes may alter and reduce the efficacy of these drugs compared
to unmodified daily somatropin (hGH) and may also negatively impact the drug’s safety.
Novo Nordisk received regulatory approval in various countries and regions including the U.S., Japan, and EU
for once-weekly somapacitan (SOGROYA
®
) for replacement of endogenous growth hormone in adult patients
with GHD and pediatric patients with GHD.
Pfizer (in collaboration with OPKO Health Inc.) received regulatory approval of once-weekly somatrogon
(NGENLA) in various countries and regions including the U.S., Japan, and EU for pediatric GHD.
A permanently PEGylated long-acting growth hormone developed by GeneScience Pharmaceuticals Co., Ltd.
(Jintrolong
®
) is available in China and the Somatropin Biopartners product (LB03002) is available in Korea.
Other experimental growth hormone therapies based on permanent modification are in different stages of
clinical development by various companies, including Genexine Inc., I-MAB, and JCR Pharmaceuticals Co.,
Ltd.
Our Solution: TransCon hGH
TransCon hGH is a prodrug composed of somatropin (“hGH”) that is transiently bound to a carrier and
proprietary linker. TransCon hGH is administered once weekly and is designed to maintain the same mode of
Financial Statements
17
action as daily therapies by providing sustained release of active, unmodified somatropin, the same
recombinant growth hormone molecule used in the daily hGH therapies that are the current standard of care.
TransCon Growth Hormone (hGH) for pediatric GHD
TransCon hGH, marketed under the brand name SKYTROFA
®
(lonapegsomatropin-tcgd), received regulatory
approval in the U.S. for the treatment of pediatric patients one year and older who weigh at least 11.5 kg and
have growth failure due to inadequate secretion of endogenous growth hormone, also known as growth
hormone deficiency. SKYTROFA has been commercially available for prescription in the United States since
October 2021. In the EU, we received marketing authorization for TransCon hGH – known by its brand name
SKYTROFA (lonapegsomatropin) – 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.
SKYTROFA has been commercially available for prescription in Germany since September 2023.
In September 2023, we announced topline results from the completed enliGHten Trial, an open-label extension
trial evaluating the long-term safety and efficacy of TransCon hGH as a once-weekly treatment for children
and adolescents with growth hormone deficiency. The enliGHten Trial enrolled 298 participants (mean age
10.3 years) from the Phase 3 heiGHt Trial of treatment-naïve pediatric GHD patients and the Phase 3 fliGHt
Trial of pediatric GHD patients switching from daily somatropin treatment. Patients in these trials received a
total of up to 6 years of treatment with TransCon hGH. At the time of the enliGHten Trial closure, 81 participants
were designated as treatment completers, based on their physician’s determination that treatment for pediatric
GHD was no longer required. Of these treatment completers, 59% met or exceeded their average parental
height standard deviation score (“SDS”), with mean TransCon hGH treatment duration of 3.2 years.
Clinical Trial of TransCon hGH in Japanese Pediatric GHD
In our ongoing Phase 3 riGHt Trial, we are evaluating TransCon hGH as a treatment in Japanese children with
GHD. The primary objective of the riGHt Trial is to evaluate and compare the annualized height velocity of
approximately 40 Japanese prepubertal children with GHD treated with once-weekly TransCon hGH to that of
children treated with a commercially available daily hGH formulation at 52 weeks. Enrollment in the riGHt trial
was completed during the fourth quarter of 2023.
Proprietary Auto-injector
SKYTROFA includes the SKYTROFA
®
Auto-Injector and cartridges. The auto-injector provides for room
temperature storage, includes an empty-all design, and is expected to last for at least four years. The device
has a single, low-volume injection for the majority of patients of less than 0.6 mL and requires a thin, 31-gauge
needle that is only 4 millimeters in length, which is comparable to needles used to administer daily hGH. We
are also working on strategies that will enable the auto-injector to integrate with the digital healthcare system,
including Bluetooth connectivity features to allow for easy tracking of dosing adherence over time.
Financial Statements
18
Figure: Our state-of-the-art auto-injector is designed to improve treatment compliance for children with GHD.
TransCon Product Candidates – Endocrinology Rare Diseases
TransCon Growth Hormone (hGH) for Other Indications
Clinical Development in Adults
We are currently conducting the foresiGHt Trial, a global Phase 3 trial that aims to demonstrate the metabolic
benefits of TransCon hGH in adults and with the primary objective to evaluate change in trunk fat percentage.
In December 2023, we announced positive topline results from foresiGHt, a Phase 3 randomized, parallel-
arm, placebo-controlled (double-blind) and active-controlled (open-label) trial to compare the efficacy and
safety of TransCon hGH with placebo and daily hGH in adults with GHD.
The foresiGHt Trial evaluated 259 adults with GHD aged 23 to 80 years old, randomized 1:1:1, titrated to
receive a target fixed dose of TransCon hGH, placebo, or daily hGH based on age and oral estrogen intake,
with approximately equivalent hGH mg/week for TransCon hGH and daily hGH.
• TransCon hGH demonstrated superiority on its primary efficacy endpoint at Week 38:
Change from baseline in trunk percent fat as measured by dual x-ray absorptiometry
(TransCon hGH -1.67% vs. placebo +0.37%, LS mean difference = -2.04%, p < 0.0001)
• TransCon hGH demonstrated superiority on its key secondary efficacy endpoints at Week 38:
Change from baseline in total body lean mass (TransCon hGH +1.60 kg vs placebo -0.10 kg,
LS mean difference = 1.70 kg, p < 0.0001)
Change from baseline in trunk fat mass (TransCon hGH -0.48 kg vs placebo +0.22 kg, LS
mean difference = -0.70 kg, p = 0.0053)
• Exploratory post-hoc analysis at Week 38 demonstrated comparable treatment effect of TransCon
hGH and daily hGH on target tissues. For patients with IGF-1 SDS levels ≤ 1.75 at Week 38:
Change from baseline in trunk percent fat (TransCon hGH -2.42% vs. daily hGH -2.59%)
Change from baseline in total body lean mass (TransCon hGH +1.70 kg vs daily hGH +1.37
kg)
Financial Statements
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Change from baseline in trunk fat mass (TransCon hGH -0.90 kg vs daily hGH -0.94 kg)
• TransCon hGH was generally safe and well tolerated, with no discontinuations related to study drug
and with comparable safety and tolerability to daily hGH.
Other Development Plans
In June 2022, we initiated the Phase 2 New InsiGHTS Trial in the U.S. to evaluate TransCon hGH in Turner
syndrome. In this trial, we are evaluating higher doses of TransCon hGH and daily hGH for Turner syndrome
compared to doses for pediatric or adult GHD. Topline results from New InsiGHTS are expected in the fourth
quarter of 2024. In addition, we are considering other potential indications for TransCon hGH where we believe
a long-acting hGH therapy may offer benefits to patients with rare growth disorders, including in combination
with our TransCon CNP product candidate in achondroplasia.
Financial Statements
20
TransCon PTH
Market Opportunity in Hypoparathyroidism
Hypoparathyroidism is a rare endocrine disease characterized by insufficient levels of parathyroid hormone
(“PTH”). Most patients with hypoparathyroidism develop the condition following damage to or accidental
removal of the parathyroid glands during thyroid surgery. Post-surgical hypoparathyroidism accounts for the
majority of cases (70-80%); other etiologies include autoimmune disorders, genetic disorders such as
autosomal dominant hypocalcemia type 1 (“ADH1”), and idiopathic causes. Conventional therapy with oral
calcium and active vitamin D (also called calcitriol) does not effectively address the short-term symptoms, long-
term complications, or quality-of-life impacts of hypoparathyroidism.
Short-term symptoms include weakness, severe muscle cramps (tetany), abnormal sensations such as
tingling, burning and numbness (paresthesia), memory loss, impaired judgment, and headache. Patients often
experience decreased quality of life, and, over the long term, prolonged use of conventional therapy may
increase risk of major complications, such as calcium deposits in the brain, blood vessels, eye, and other soft
tissues. According to a recent systematic literature review, chronic hypoparathyroidism treated with
conventional therapy is associated with higher rates of renal complications compared to the general
population, such as nephrolithiasis (up to 36%), nephrocalcinosis (up to 38%), and chronic kidney disease (up
to 41%). Hypoparathyroidism remains among the few hormonal insufficiency states without a replacement
therapy that restores the missing hormone at physiologic levels.
Hypoparathyroidism also poses a high burden on the healthcare system despite current conventional therapy.
For example, one survey of 374 patients showed that 72% experienced more than ten symptoms in the
preceding twelve months, with symptoms experienced for a mean of 13 ± 9 hours a day. Other studies showed
that 79% of hypoparathyroidism cases require hospitalizations and that patients with the disease have a four-
fold increase in the risk of renal disease compared to healthy controls. Patients often experience decreased
quality of life. We conducted a survey of 42 patients which found that 100% of patients reported negative
psychological impacts, interference with daily life and impact on physical functioning from HP, and that 76%
were either no longer able to work or experienced interference with work productivity.
The 2022 Guidelines from the Second International Workshop addressing the prevention, diagnosis, and
management of hypoparathyroidism was published in September 2022 in the Journal of Bone and Mineral
Research and authored by leading clinicians from North America, Europe, and Asia. The authors suggest
consideration of PTH replacement therapy in patients whose hypoparathyroidism is inadequately controlled
with conventional therapy. Inadequate control is considered to be any one of the following: symptomatic
hypocalcemia, hyperphosphatemia, renal insufficiency, hypercalciuria, or poor quality of life. In addition, the
guideline indicates that individuals with poor compliance, malabsorption or who are intolerant of large doses
of calcium and active vitamin D may also benefit from PTH replacement therapy. Based on this current
guideline, we believe PTH replacement therapy could be applicable to most patients with hypoparathyroidism.
Currently, an effective PTH replacement therapy that fully addresses the condition is not widely available to
patients with hypoparathyroidism. In 2015, NATPARA
®
(parathyroid hormone) for injection was approved in
the U.S. for once-daily subcutaneous injection as an adjunct to vitamin D and calcium in patients with
hypoparathyroidism. NATPARA was voluntarily recalled in September 2019 in the U.S. and is now only
available to a limited number of patients through a Special Use Program offered by its manufacturer, Takeda.
In October 2022, Takeda announced that it will discontinue manufacturing NATPARA/NATPAR globally by the
end of 2024.
We are also aware of several academic groups and companies working on making longer-acting agonists of
the PTH receptor (“PTH1R”). In addition, other companies and groups are developing or commercializing
therapies for hypoparathyroidism, including Calcilytix (a BridgeBio company), Entera Bio, Extend Biosciences,
Massachusetts General Hospital, Amolyt Pharma, and MBX Biosciences.
Teriparatide, PTH (1-34), approved since 2002 for the treatment of osteoporosis, has sometimes been used
for treatment of hypoparathyroidism using multiple daily injections, despite not being approved for this
indication. Clinical research conducted by the National Institutes of Health (“NIH”) in subjects receiving
continuous exposure to PTH (1-34), administered by an infusion pump, demonstrated simultaneous
normalization of sCa and urinary calcium, as well as normalization of bone turnover.
Financial Statements
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We estimate hypoparathyroidism affects over 250,000 patients in the U.S. and Europe. In the U.S., we estimate
hypoparathyroidism affects approximately 70,000 to 90,000 patients, including 4,000 to 5,000 patients who we
estimate have previously been treated with PTH therapy. In Germany, we estimate hypoparathyroidism affects
approximately 70,000 patients. Outside of Germany, we estimate hypoparathyroidism affects over 100,000
patients in the rest of Europe.
Our Solution: TransCon PTH
TransCon PTH (palopegteriparatide) is an investigational prodrug of PTH (1-34) 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 provide PTH in the
physiological range for 24 hours per day, thereby more fully addressing all aspects of the disease, including
normalizing serum and urinary calcium and serum phosphate levels.
With once-daily dosing, we believe this substantial half-life extension of PTH could more closely reflect the
physiological levels of PTH observed in healthy individuals, thereby maintaining blood calcium levels and
normalizing urinary calcium excretion. By providing steady levels of PTH in the physiological range, we believe
TransCon PTH can address the fundamental limitations of PTH therapies with short half-life molecules and
become a highly differentiated therapy for hypoparathyroidism.
In November 2023, TransCon PTH received regulatory approval in the EU and other territories and will be
marketed in the EU as YORVIPATH
®
, a parathyroid hormone (PTH) replacement therapy indicated for the
treatment of adults with chronic hypoparathyroidism.
In January 2024, we announced that YORVIPATH is commercially available in Germany and Austria.
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 are
evaluating TransCon PTH in adult patients with hypoparathyroidism. Following the primary outcome period,
all three trials continue in the open-label extension portion to collect long-term data.
In December 2023, we announced that the FDA accepted for review our resubmitted New Drug Application
(“NDA”) for TransCon PTH (palopegteriparatide) for the treatment of adult patients with hypoparathyroidism.
The agency considered the resubmission a complete, class 2 response and set a PDUFA goal date of May
14, 2024. In the U.S., TransCon PTH (palopegteriparatide) is an investigational prodrug of parathyroid
hormone (PTH [1-34]) for adult patients with hypoparathyroidism. The resubmission followed the Type A
meeting held with the FDA in late August, held after the FDA's issuance of a complete response letter (“CRL”)
in May 2023 for the TransCon PTH (palopegteriparatide) NDA for the treatment of adults with
hypoparathyroidism. In the CRL, the FDA cited concerns related to the manufacturing control strategy for
variability of delivered dose in the TransCon PTH drug/device combination product. The FDA did not express
concern in the CRL about the clinical data submitted as part of the NDA package and no new preclinical
studies, or Phase 3 clinical trials to evaluate safety or efficacy, were requested in the letter.
In September 2023, we announced new post hoc analysis showing adults with hypoparathyroidism treated
with TransCon PTH demonstrated substantial improvement in estimated glomerular filtration rate (“eGFR”),
suggesting improved kidney function. In the Phase 3 PaTHway Trial, mean baseline eGFR was 67.3 and 72.7
mL/min/1.73m2 for subjects randomized to TransCon PTH and placebo, respectively. At Week 26, patients
treated with TransCon PTH experienced a mean increase in eGFR of 7.9 mL/min/1.73m2 compared to
baseline (p<0.0001) while those on placebo experienced a mean decrease in eGFR of -1.9 mL/min/1.73m2
compared to baseline (p=0.3468). By Week 52, patients treated with TransCon PTH, including those crossing
over from placebo, experienced a mean increase in eGFR of 8.9 mL/min/1.73m2 compared to baseline
(p<0.0001). The improvement at Week 52 was even greater, for patients with eGFR <60 at baseline, the
threshold for impaired kidney function, experiencing a mean increase in eGFR of 11.5 mL/min/1.73m2.
PaTHway: eGFR Change from Baseline by eGFR Group
Baseline
Week 26
Week 52
Study Arm
eGFR
(mL/min/1.73m
2
)
N
Mean
(p value)
N
Mean
(p value)
Financial Statements
22
TransCon PTH / TransCon
PTH
eGFR < 60
19
+11.4
(p=0.0002)
19
+11.5
(p=0.0003)
eGFR ≥ 60
41
+6.3
(p=0.0002)
40
+8.2
(p <0.0001)
All
60
+7.9
(p< 0.0001)
59
+9.3
(p<0.0001)
Placebo (first 26 weeks) /
TransCon PTH*
eGFR < 60
4
+0.05
(p=0.9877)
4
+11.7
(p=0.0018)
eGFR ≥ 60
15
-2.4
(p=0.3280)
15
+6.5
(p=0.0199)
All
19
-1.9
(p=0.3468)
19
+7.6
(p=0.0014)
eGFR (an assessment of kidney filtering capacity) was calculated by the trial’s central lab using the
Modification of Diet in Renal Disease Study Group (“MDRD”) equation (Levey, Ann Intern Med 2006).
*Patients in the placebo arm switched to TransCon PTH following the Week 26 visit. Among patients with
baseline eGFR < 60 mL/min/1.73m
2
(considered the threshold for impaired kidney function), approximately
50% were able to improve their eGFR to > 60 mL/min/1.73m2 with TransCon PTH therapy.
Number of Responders*
Number of Responders*
eGFR < 60
(n, %)
(n, %)
at Baseline (n)
Week 26
Week 52
TransCon PTH / TransCon PTH
n=19
n=12
n=10
63%
53%
Placebo (first 26 weeks) / TransCon
PTH**
n=4
n=0
n=3
0%
75%
Total PaTHway Trial
n=23
n=12
n=13
52%
57%
eGFR based on central lab data using the MDRD Study Group formula.
* Responders defined as moving from eGFR < 60 to eGFR ≥ 60. Units in (mL/min/1.73m
2
).
** Patients in the placebo arm switched to TransCon PTH following the Week 26 visit.
In June 2023, we announced one-year (Week 52) data from the open-label extension (“OLE”) portion of the
Phase 3 PaTHway Trial of TransCon PTH in adults with hypoparathyroidism. PaTHway is a Phase 3 trial of
TransCon PTH with a placebo-controlled 26-week blinded portion and a 156-week OLE portion, designed to
evaluate the long-term efficacy and safety of TransCon PTH as a potential hormone therapy for adult patients
diagnosed with hypoparathyroidism. Of the 82 study participants dosed, 79 completed blinded treatment and
entered the OLE, and 78 (59 TransCon PTH/TransCon PTH, 19 placebo/TransCon PTH) completed Week 52.
The data showed that treatment with TransCon PTH resulted in sustained improvements through Week 52,
as well as safety and tolerability similar to that reported for the initial 26-week blinded portion of the trial. As of
December 31, 2023, 75 out of 79 patients continue in the OLE and have exceeded two years of follow-up in
the PaTHway Trial.
In June 2023, we announced that we started enrollment for a Compassionate Use Program (“CUP”) in
Germany for TransCon PTH (palopegteriparatide). The CUP was approved by Germany’s Federal Institute for
Drugs & Medical Devices (Bundesinstitut für Arzneimittel & Medizinprodukte). Through the CUP, treating
physicians can request TransCon PTH (palopegteriparatide) for eligible adult patients with hypoparathyroidism
whose clinical condition, in the opinion of the treating physician, requires PTH treatment with
palopegteriparatide, and who cannot be adequately treated with currently approved products or participate in
a palopegteriparatide clinical trial. Following the German commercial launch of YORVIPATH in January 2024,
the CUP will draw to a close.
On January 8, 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. As of December 31, 2023, 12 patients continue in the ongoing 3-year extension portion
of the PaTHway Japan Trial.
Financial Statements
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In December 2022, the FDA allowed us 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, allowing U.S. physicians to request access to investigational TransCon PTH for their eligible
patients.
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 maintenance of normal mean serum calcium levels and 93% of patients achieving
independence from conventional therapy with active vitamin D and oral calcium. As of December 31, 2023, 57
out of the 59 patients continued in the OLE portion of the trial, where they receive an individualized
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.
In March 2022, we announced that top-line data from the randomized, double-blind, placebo-controlled portion
of the Phase 3 PaTHway Trial of TransCon PTH in adults with hypoparathyroidism demonstrated statistically
significant higher proportion of participants treated with TransCon PTH achieved the primary composite
endpoint compared to placebo. 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 oral
calcium) 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.
In April 2020, we announced top-line data from the four-week fixed dose, double-blinded portion of PaTH
Forward, a global Phase 2 trial evaluating the safety, tolerability and efficacy of TransCon PTH in adult subjects
with hypoparathyroidism. A total of 59 subjects were randomized in a blinded manner to receive fixed doses
of TransCon PTH at 15, 18 or 21 µg/day or placebo for four weeks using a ready-to-use prefilled pen injector
planned for commercial presentation. All doses of TransCon PTH were well-tolerated, and no serious or severe
treatment-related adverse events (“TEAEs”), were observed at any point. No treatment-emergent adverse
events led to discontinuation of study drug, and the overall incidence of TEAEs was comparable between
TransCon PTH and placebo. Additionally, there were no drop-outs during the four-week fixed dose period.
In June 2018, we were granted Orphan Drug Designation (“ODD”) by the FDA, for TransCon PTH for the
treatment of hypoparathyroidism. In October 2020, we were granted Orphan designation (“OD”) by the EC for
TransCon PTH for the treatment of hypoparathyroidism. In July 2021, the Ministry of Health, Labour and
Welfare granted ODD to TransCon PTH for the treatment of hypoparathyroidism.
Financial Statements
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TransCon CNP
Market Opportunity in Achondroplasia
Achondroplasia is the most common genetic form of skeletal dysplasia leading to disproportionate short stature
and is associated with a well-delineated range of clinical complications and manifestations, occurring in about
one in 10,000 to 30,000 newborns or approximately 250,000 worldwide. Achondroplasia results in severe
skeletal complications and comorbidities including spinal stenosis due to premature fusion of the foramen
magnum, sleep apnea, chronic ear infections, and muscular complications. Patients often face multiple
surgeries to alleviate its many complications. There is significant unmet need for treatments that ameliorate
complications and improve quality of life in achondroplasia.
Achondroplasia is primarily caused by gain-of-function variants of the FGFR3 gene resulting in constitutive
activation of FGFR3 that leads to an imbalance in the effects of the FGFR3 and C-type natriuretic peptide
(“CNP”) signaling pathways. In achondroplasia, mutations in FGFR3 result in constitutive activation,
suppressing the proliferation and differentiation of chondrocytes resulting in improper cartilage to bone
conversion in the growth plate, and dysfunction in the skeletal muscle. Preclinical and clinical data show that
the CNP pathway helps to counteract the effects of the FGFR3 mutation downstream.
In November 2021, BioMarin Pharmaceutical Inc.’s VOXZOGO
®
(vosoritide) was approved by the FDA and is
indicated to increase linear growth in pediatric patients with achondroplasia with open epiphyses. Other
companies that are developing therapies for achondroplasia include QED Therapeutics (a BridgeBio
company), Sanofi, Ribomic, Tyra Biosciences, and ProLynx.
Changing the Treatment Paradigm of Achondroplasia
Clinical manifestations of achondroplasia are associated with significant, potentially life-threatening
complications and reduced quality of life. While achondroplasia has historically been considered a growth
disorder, secondary manifestations beyond linear growth, including reduced muscle strength and stamina,
suggest that achondroplasia is also a muscle disorder.
ACH-AE: Increased incidence of Achondroplasia-related Adverse Events.
HRQoL: Reduced Health-Related Quality of Life; Height; Reduced height. Muscle Strength/Stamina; Reduced muscular
functionality, including reduced strength and stamina.
Financial Statements
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Our Solution: TransCon CNP
TransCon CNP (navepegritide) is an investigational prodrug of CNP administered once weekly and designed
to provide sustained release of active CNP supporting continuous exposure for the treatment of
achondroplasia. 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
Our ongoing pivotal ApproaCH Trial, ACcomplisH trial, and our long-term extension trial AttaCH, are evaluating
the safety and efficacy of TransCon CNP in children (aged 2 to eleven years) with achondroplasia.
In December 2023, we announced new analyses demonstrating benefits beyond linear growth from the blinded
and ongoing OLE portions of ACcomplisH, a Phase 2 randomized, double-blind, placebo-controlled, dose-
escalation trial of TransCon CNP in children ages 2-10 years with achondroplasia. In the trial, all 57 patients
have now completed one year of treatment with TransCon CNP at 100 µg/kg/week, the dose agreed with
regulatory agencies for the active arm in our pivotal ApproaCH Trial.
We analyzed available data for patients who only received TransCon CNP at the 100 µg/kg/week dose in
either blinded or OLE part and were treated for one year (n=19), compared to those administered placebo for
one year (n=15). Results showed that these TransCon CNP-treated patients (data available for 9-16 patients)
showed significant improvements in health-related quality of life and disease impacts compared to those
receiving placebo (data available for 5-13 patients).
Assessments were performed with the SF-10 (a 10-item non-disease specific survey of a child’s functional
health and well-being) and the Achondroplasia Child Experience Measure (“ACEM”) a condition-specific
clinical outcome measure that assesses the impact of achondroplasia on a child’s health-related quality of life,
with statistically significant improved outcome in TransCon CNP-treatment versus placebo for:
• SF-10 Physical Summary (p=0.002, ages 5 years and older)
• ACEM Daily Living Function (p=0.047)
• ACEM Emotional Well-being (p=0.045)
Financial Statements
26
The 46 children switching from placebo or a lower dose of TransCon CNP to the 100 µg/kg/week dose in the
OLE demonstrated improved growth after one year of treatment, similar to the growth benefits seen in the 11
children treated with 100 µg/kg/week in the one-year randomized, double-blind period of ACcomplisH.
During the fourth quarter of 2023, we filed a Clinical Trial Application for COACH, a Phase 2 open-label single-
arm trial evaluating TransCon CNP and TransCon hGH in children with achondroplasia (age 2 to 11 years).
The primary objective is to evaluate the treatment effect on linear growth and safety. Secondary objectives are
to evaluate treatment effect on quality of life, radiological endpoints, physical functioning, and body
composition. The trial plans to enroll approximately 18 patients (treatment naïve, n=18; prior treatment with
TransCon CNP (100 mg/kg/week) for at least 1 year, n=6).
During the third quarter of 2023, we filed an IND amendment with the FDA to initiate reACHin, a Phase 2,
multicenter, double-blind, randomized, placebo-controlled trial, designed to evaluate the safety, tolerability,
and efficacy of 100 μg CNP/kg of TransCon CNP once-weekly for 52 weeks in infants with achondroplasia,
aged 0 to < 2 years at the time of randomization.
In September 2023, we announced completion of enrollment in ApproaCH with a total of 84 subjects
randomized. U.S. and EU regulatory agencies have endorsed ApproaCH, a global randomized, double-blind,
placebo-controlled trial in children ages 2–11 years with achondroplasia, as a pivotal Phase 3 trial. The primary
endpoint of the trial is annualized growth velocity at 52 weeks with additional endpoints analyzing
achondroplasia-related co-morbidities and quality of life. Topline results from the ApproaCH trial are expected
in the fourth quarter 2024.
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 in children with achondroplasia aged two to ten years old.
The ACcomplisH Trial evaluated 57 children with achondroplasia aged 2 to 10 years old, randomized in a 3:1
ratio to receive either sequential ascending doses of once-weekly TransCon CNP (6 µg/kg/week, 20
µg/kg/week, 50 µg/kg/week, 100 µg/kg/week) or placebo for 52 weeks. The trial met its primary objectives,
demonstrating that TransCon CNP at 100 µg/kg/week (n=11) was superior to placebo (n=15) on the primary
efficacy endpoint of annualized growth velocity (“AGV”) 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 December 31, 2023, the first 25 patients completed the OLE portion of the ACcomplisH
Trial and transitioned into the Phase 2 AttaCH Trial, a multicenter, long-term, open label extension and 24
continue treatment; 32 patients continue in OLE portion of ACcomplisH.
Additional highlights:
• TransCon CNP demonstrated a consistent dose-dependent increase in AGV across the four dose
groups.
• Mean improvements in AGV for TransCon CNP-treated patients were consistent across age groups
<5 years and >5 years, with dose response established.
• TransCon CNP at 100 µg/kg/week improved change in achondroplasia-specific height SDS
compared to placebo (p=0.0283).
• TransCon CNP was generally well tolerated, with no discontinuations.
• No serious adverse events (“SAEs”) related to treatment were reported; two unrelated SAEs were
reported.
• Injections were generally well tolerated with low frequency of injection site reactions (“ISRs”):
11 mild ISRs (in 8 patients) out of >2,000 injections.
• Investigator-assessed achondroplasia-related AEs were less frequently reported among
participants receiving TransCon CNP (31%; 13/42) compared with placebo (60%; 9/15).
Financial Statements
27
In 2019, we initiated the ACHieve Study, a five-year, multi-center natural history study designed to gain insight
into the experiences of pediatric patients with achondroplasia. ACHieve is designed to evaluate growth
velocity, body proportionality, and comorbidities over time in children with achondroplasia up to eight years
old. No study medication will be administered in the ACHieve Study.
In February 2019, we were granted ODD by the FDA for TransCon CNP for the treatment of achondroplasia.
In July 2020, we received OD from the EC for TransCon CNP for the treatment of achondroplasia.
TransCon Product Candidates—Oncology
Market Opportunity in Oncology
Efficacy of many cancer treatments remains suboptimal and the incidence of cancer continues to rise.
Improved understanding of the cellular and molecular mechanisms involved in anti-tumor immune responses
has fueled the rapid growth of immuno-oncology therapeutics. Immune checkpoint inhibitors, such as anti-PD-
(L)1 and anti-CTLA-4 antibodies, have provided new therapeutic options for patients.
Despite recent advances, a high need for new treatment options remains for patients who do not respond or
respond inadequately to current therapies. In addition to insufficient efficacy, many current treatments are
limited by toxicities that result in dose reductions, treatment discontinuations, or long-term health risks to
patients.
We believe that one approach to improving efficacy while limiting adverse events is to create long-acting
product candidates using our sustained systemic release TransCon technology, allowing for more consistent
circulating drug levels and potentially avoiding high peak concentrations that are often associated with toxicity.
Another approach is to target the drug activity into tumors via intratumoral injection using our sustained
localized release TransCon hydrogel technology, aiming for high activity in the tumor microenvironment while
limiting systemic adverse events. While one intratumoral treatment has been approved for the local treatment
of recurrent melanoma, the overall success of intratumoral treatments has been limited to date. This is likely
partly due to lack of prolonged intratumoral exposure of active drug levels, and resulting in the potential need
for more frequent dosing.
Our Solution: TransCon Technologies for Oncology
We believe prolonging the therapeutic activity and targeting the drug activity to the relevant cell types and
tissues have the potential to improve treatment outcomes. We believe TransCon is well-suited to improve
cancer treatments given the large number of validated targets with known limitations. By applying our unique
algorithm for product innovation to clinically validated targets and pathways, we believe TransCon has the
potential to improve outcomes currently limited by suboptimal efficacy and systemic toxicity.
We believe TransCon technologies may have the potential to increase the efficacy of small molecules, peptides
and proteins without increasing toxicity, which could offer the potential to treat more patients with new
combination and multi-agent regimens that would not otherwise be feasible.
We are currently investigating two clinical-stage product candidates designed to activate the patient’s own
immune system to eradicate malignant cells. We believe our approach, if successfully developed, has the
potential to improve the efficacy of systemically administered, clinically validated therapies while limiting
adverse effects.
Similarly, with the potential to achieve sustained local release at predictable levels, we believe TransCon
hydrogel product candidates may allow for improved efficacy and reduced dosing frequency of intratumorally
administered therapies, potentially enabling treatments of multiple tumor types, including those that cannot be
easily accessed for frequent injection.
Financial Statements
28
Development of TransCon Product Candidates in Oncology
Our TransCon product candidates in oncology are designed to provide sustained systemic or intratumoral
administration, which we believe could provide potent and durable anti-tumor efficacy. Our nonclinical studies
have shown sustained activation of cytotoxic immune cells that resulted in robust anti-tumor responses by
TransCon product candidates using infrequent administration.
Two of our oncology product candidates, TransCon TLR7/8 Agonist and TransCon IL-2 /, are now in clinical
development. In addition, we believe that a combination of TransCon TLR7/8 Agonist and TransCon IL-2 /
may have the potential to produce greater anti-tumor activity than either candidate alone.
TransCon TLR7/8 Agonist for sustained localized release
TransCon TLR7/8 Agonist is an investigational long-acting prodrug, designed for sustained intratumoral
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, has completed dose escalation and is enrolling
patients in four indication-specific cohorts where increased TLR7/8 activity has potential to improve innate and
adaptive immune activation and host defense against cancers: head and neck squamous cell carcinoma
(HNSCC), HPV-associated cancers, melanoma, and cutaneous squamous cell carcinoma (cSCC). Initial data
from these cohorts are expected by the end of 2024.
In May 2023, we announced additional follow-up from the transcendIT-101 Trial indicating further clinical
activity in patients receiving TransCon TLR7/8 Agonist as monotherapy or in combination with pembrolizumab.
Enrollment continues in the Phase 2 portion of transcendIT-101 at the recommended Phase 2 dose (“RP2D”).
In November 2022, we announced new data (cutoff date of September 21, 2022) 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 RP2D was declared at 0.5 mg/lesion for up to two lesions, which is being
evaluated in four indication specific cohorts.
TransCon IL-2
/
for sustained systemic release
TransCon IL-2 / is an investigational long-acting prodrug designed to improve cancer immunotherapy
through sustained release of an IL-2 variant that selectively activates IL-2 /,, with minimal binding to IL-2Rα.
The IL-Believe Trial, a Phase 1/2 clinical trial to evaluate the safety and efficacy of TransCon IL-2 / in locally
advanced or metastatic solid tumors, alone or in combination with pembrolizumab or standard of care
chemotherapy, has completed dose escalation and is enrolling patients in multiple indication-specific dose
expansion cohorts, including platinum-resistant ovarian cancer (PROC), cervical cancer, melanoma, non-small
cell lung cancer (NSCLC), and small cell lung cancer (SCLC) at the RP2D. Initial data from these cohorts are
expected by the end of 2024.
During the fourth quarter of 2023, the first patient was dosed with the combination of TransCon IL-2 / and
TransCon TLR7/8 Agonist in the post PD-1 melanoma dose expansion cohort in the IL-Believe Trial.
In October 2023, we announced new and updated data from the ongoing IL-Believe Trial. Forty-six patients
were enrolled into dose escalation cohorts: 25 to monotherapy and 21 to combination therapy. As of the August
15, 2023 data cutoff, anti-tumor clinical responses were observed with TransCon IL-2 / monotherapy
(colorectal cancer with confirmed partial response (“PR”)) or in combination with pembrolizumab (small cell
lung cancer, one with confirmed PR and one ongoing with unconfirmed complete response) in heavily pre-
treated patients who previously progressed on checkpoint inhibitors. TransCon IL-2 / every three weeks was
generally well-tolerated, with no meaningful effect on Tregs and eosinophils.
Financial Statements
29
In September 2023, we announced completion of Phase 1 dose escalation in combination with pembrolizumab
of the IL-Believe Trial with a total of 21 patients enrolled and RP2D determined at 120 µg/kg IV every three
weeks. Twenty-one patients were enrolled.
In May 2023, we announced completion of the Phase 1 monotherapy dose escalation of the IL-Believe Trial
with RP2D determined at 120 µg/kg IV every three weeks with 25 heavily pre-treated patients enrolled and a
median of four prior lines of systemic therapies.
Other Development Plans
To further evaluate safety and anti-tumor efficacy of TransCon TLR7/8 Agonist and TransCon IL-2 b/g, we are
also evaluating these product candidates as neoadjuvant therapy in the ongoing randomized Phase 2
BelieveIT-201 trial in resectable locally advanced head and neck squamous cell carcinoma.
Strategic Collaborations
We also engage in strategic collaborations to further leverage our TransCon technologies in certain
geographies with market-leading biopharmaceutical companies. These collaborations aim to make promising
treatment options available to more patients and to further monetize both our TransCon technologies and our
internal product candidates, particularly into therapeutic areas where we believe a partner may have more
expertise, capability, and capital. In addition, we may choose to pursue a collaboration to develop and market
our internal, wholly owned product candidates in geographic markets outside our core focus areas of the United
States and Europe.
In November 2023, we announced that we entered into an exclusive license agreement with Teijin Limited for
the further development and commercialization of TransCon hGH, TransCon PTH, and TransCon CNP for
endocrinology rare disease in Japan. Under the terms of the agreement with Teijin Limited, we received an
upfront payment of $70 million, with additional development and regulatory milestones of up to $175 million,
transfer pricing and commercial milestones. In addition, we are eligible to receive royalties on net sales in
Japan, of up to mid-20’s percent, varying by product.
Strategic Investments
VISEN Pharmaceuticals
In November 2018, we announced the formation of VISEN, a company established to develop and
commercialize our endocrinology rare disease therapies in the People’s Republic of China, Hong Kong,
Macau, and Taiwan (“Greater China”). In connection with the formation of VISEN, we granted VISEN exclusive
rights to develop and commercialize certain product candidates based on our proprietary TransCon
technologies, including TransCon hGH, TransCon PTH and TransCon CNP, in Greater China for use in all
human indications, subject to certain exceptions. As consideration for the rights granted to VISEN, we received
50% ownership in the outstanding shares of VISEN and concurrently with the rights we granted to VISEN,
entities affiliated with Vivo Capital and Sofinnova Ventures purchased shares in VISEN for an aggregate
purchase price of $40 million in cash. In January 2021, we invested additional $12.5 million in VISEN as part
of VISEN’s $150 million Series B financing. Following the Series B financing, we retained 43.93% of VISEN’s
issued and outstanding shares.
In November 2023, VISEN announced topline results from the Phase 2 ACcomplisH China Trial in children
with achondroplasia aged 2 to 10 years. The trial met its primary objectives, demonstrating that TransCon
CNP at 100 µg/kg/week was superior to placebo on the primary efficacy endpoint of AGV at 52 weeks
(p=0.018).
In November 2022, VISEN announced data from its pivotal Phase 3 study of TransCon hGH in children with
GHD in China. The trial achieved its primary endpoint; patients treated with TransCon hGH demonstrated
greater annualized height velocity at 52-weeks (p=0.0010) compared to patients treated with daily growth
hormone with comparable safety and tolerability to daily growth hormone.
In June 2022, VISEN announced it had completed enrollment of the Phase 3 PaTHway China Trial of
TransCon PTH.
Financial Statements
30
Market Opportunity in China
China is the second largest pharmaceutical market in the world after the United States and represents one of
the fastest growing pharmaceutical markets worldwide. In recent years, the Chinese government has initiated
a number of regulatory reforms that are expected to accelerate drug development, as well as drive growth and
demand for new therapeutics in China. In addition to joining an international organization that standardizes
regulations for clinical development, the National Medical Products Administration has introduced initiatives
such as fast track review for drugs for unmet medical needs and adopted new rules that streamline the drug
approval process in China for global companies.
The purpose of our investment in VISEN is to support our strategy to extend our endocrinology rare disease
portfolio globally and establish a presence in China in partnership with collaborators who have significant
experience and knowledge of the biopharmaceutical opportunity in China.
Rights Agreements
Under the Rights Agreements, VISEN must use diligent efforts to develop and commercialize licensed products
in Greater China. Additionally, we and VISEN will conduct certain research and development activities
allocated to the respective party under a research and technical development plan, and VISEN will reimburse
us for costs of conducting such activities, including costs of our personnel committed to performing such
activities in Greater China.
We entered into a clinical supply agreement with VISEN in 2018 to provide product supply for use in conducting
clinical trials in Greater China. Additionally, during 2023, we entered into a commercial supply agreement
governing commercial supply of licensed product (TransCon hGH) to VISEN on the terms and conditions set
forth in the Rights Agreements.
Under the Rights Agreements, we agreed not to research, develop, or commercialize competing products in
Greater China, and VISEN agreed not to grant certain rights under its interest in any inventions or intellectual
property arising out of the activities conducted under the Rights Agreements to third-parties, in each case,
under the terms and conditions specified in the Rights Agreements. We will have the right to exploit inventions
and intellectual property arising out of the activities conducted under the Rights Agreements outside of Greater
China. Additionally, we granted VISEN a right of first negotiation to develop and commercialize certain of our
endocrinology products in Greater China.
The Rights Agreements continue in effect for as long as a valid claim of a licensed patent exists in Greater
China. VISEN may terminate a Rights Agreement for convenience, for uncured material breach by us of a
Rights Agreement and for our bankruptcy or insolvency-related events. We may terminate a Rights Agreement
for certain specified material breaches thereof by VISEN, in the event VISEN undergoes a change of control
in favor of a competitor, if VISEN challenges the validity of any of the licensed patents and for VISEN’s
bankruptcy or insolvency-related events.
Amended and Restated Shareholders Agreement
In connection with the Company’s investment in VISEN, on January 8, 2021, the Company entered into an
Amended and Restated Shareholders Agreement (the “Amended Shareholders Agreement”), amending and
restating the Shareholders Agreement dated November 7, 2018, between the Company and the parties set
forth therein (the “Shareholders Agreement”). In addition to rights previously granted under the Shareholders
Agreement, under the Amended Shareholders Agreement, the Company has the right to designate two
individuals for election to the board of directors of VISEN, which individuals are initially Jan Møller Mikkelsen
and Michael Wolff Jensen. In addition, VISEN has agreed that certain specified events (including certain
liquidation events) shall require the approval of (i) shareholders of VISEN holding at least 50% of VISEN’s
Series B preferred shares, (ii) shareholders of VISEN holding at least 60% of VISEN’s Series A preferred
shares and/or (iii) certain members of VISEN’s board of directors. The Amended Shareholders Agreement can
be terminated by written agreement among the holders of at least 60% of VISEN’s Series A preferred shares
and at least 50% of VISEN’s Series B preferred shares.
Financial Statements
31
Eyconis
In January 2024, we announced the formation and launch with Frazier Life Sciences of Eyconis, Inc., a
separate company created to develop, manufacture, and commercialize TransCon ophthalmology assets
globally, together with a $150 million commitment from an investor syndicate that includes Frazier, RA Capital
Management, venBio, and HealthQuest Capital.
We have granted Eyconis exclusive rights to develop and commercialize TransCon ophthalmology products
globally and received an equity position in the newly formed company. In addition, we will be eligible to receive
development, regulatory, and sales milestone payments, plus single digit royalties on global net sales of
commercialized products, if any. Eyconis will initially be based in Redwood City, California, and certain
employees of Ascendis are expected to join the newly formed company.
Financial Review
We had a consolidated net loss of €481.4 million for the year ended December 31, 2023 compared to a
consolidated net loss of €583.2 million for the year ended December 31, 2022. Our total equity presented a
negative balance of €145.7 million as of December 31, 2023, compared to a positive balance of €263.3 million
as of December 31, 2022. Further details about our results of operations are described in the following
sections.
All employees in Denmark (domicile country) are employed by the Parent Company, and accordingly, neither
of the Danish subsidiaries have employees. Furthermore, all external, project related expenses, as well as site
costs incurred by foreign subsidiaries are being financed by the Parent Company. All direct related project
expenses are invoiced to subsidiaries that holds the license rights for the product candidates. In addition, the
Parent Company provides services to subsidiaries, which are disclosed as revenue in the Parent Company’s
separate financial statements. All intergroup transactions are made on an arms-length basis and eliminated in
the consolidated financial statements.
Accordingly, operating results in the Parent Company highly depend on project related activities in the Group.
Revenue from commercial product sales and clinical trial supply is recognized when the customer has obtained
control of the goods and it is probable that we will collect the consideration to which we are entitled for
transferring the goods. Control is transferred upon delivery. Service fees are recognized as revenue when the
services have been performed. License agreements, which transfer rights to our intellectual property (“IP”)
with significant stand-alone value are classified as “right-to-use”, with revenue recognized at the point in time
when the customer can use and benefit from the IP.
Our operating expenses relate to research and development activities and to selling, general and
administration activities. Research and development costs (“R&D costs”) consist primarily of product
development and pre-commercial manufacturing costs, preclinical and clinical study costs and costs for
process optimizations and improvements performed by Clinical Research Organizations (“CROs”) and
Contract Manufacturing Organizations (“CMOs”), salaries and other personnel costs including pension and
share-based payment, the cost of facilities, professional fees, cost of obtaining and maintaining our intellectual
property portfolio, and depreciation of non-current assets used in research and development activities. Selling,
general and administrative expenses (“SG&A expenses”) comprise salaries and other personnel costs
including pension and share-based payment, office supplies, cost of facilities, professional fees, and
depreciation of non-current assets related to selling, general and administrative activities, and pre-commercial
and commercial activities.
A material portion of our operating expenses are denominated in other currencies than the Euro, which expose
our operating expenses to volatility. The cost increase for the year ended December 31, 2023 compared to
the year ended December 31, 2022, also reflects the impact from foreign currency development, primarily with
respect to the U.S. Dollar. We do not enter into derivative financial instruments to manage our exposure to
foreign exchange risks.
Main effects on the consolidated profit or loss, and cash flows are described in the following sections.
Financial Statements
32
Revenue
Revenue for the year ended December 31, 2023 was €266.7 million, representing an increase of €215.5 million
compared to the year ended December 31, 2022. This increase was primarily attributable to the higher
commercial sales of SKYTROFA, higher revenue from rendering of services, as well as the $70 million upfront
payment received from our exclusive license agreement with Teijin Limited.
Cost of Sales
Cost of sales for the year ended December 31, 2023 was €44.4 million, representing an increase of €32.3
million compared to the year ended December 31, 2022. This increase was primarily attributable to an increase
in commercial products sold but also attributable to a higher level of rendering services.
Research and Development Costs
The development of R&D costs reflects the advancement of our pipeline of endocrinology and oncology, where
we have multiple prodrug therapies in development, as well as ophthalmology.
R&D costs for the year ended December 31, 2023 was €413.5 million representing an increase of €33.8 million
compared to the year ended December 31, 2022. This increase was primarily due to a €26.7 million increase
in external project costs within our oncology programs, TransCon IL-2 / and TransCon TLR7/8 Agonist,
primarily driven by a general increase in development activities and scale-up and transfer activities, as well as
higher clinical trial costs. External project costs related to TransCon CNP increased by €16.5 million due to
new clinical trial start-ups in 2023. External project costs related to TransCon hGH decreased by €34.5 million
primarily driven by lower manufacturing costs and lower clinical trial activities, and external project costs related
to TransCon PTH of €40.6 million were in line with the prior year. External project costs within ophthalmology
increased by €13.6 million, driven by continued product development activities. Other research and
development costs increased by €12.5 million, primarily reflecting a general increase in employee and other
costs attributable to organizational growth, and also reflecting an impairment charge on leasehold
improvements and equipment at one of our R&D sites, following change in planned activities.
Selling, General and Administrative Expenses
SG&A expenses for the year ended December 31, 2023 was €264.4 million representing an increase of €43.2
million compared to the year ended December 31, 2022. This increase was primarily due to higher external
commercial expenses related to SKYTROFA in the U.S., pre-launch activities for SKYTROFA outside the U.S.,
global pre-launch activities for TransCon PTH, higher employee related expenses and other general and
administrative expenses attributable to organizational growth.
Finance Income and Finance Expenses
Finance income and finance expenses are affected by development in the U.S. Dollar compared to the Euro,
primarily driven by conversion of monetary positions in U.S. Dollar into Euro, including marketable securities,
cash and cash equivalents, receivables and payables, convertible notes and royalty funding liabilities. Finance
expenses are significantly affected by convertible notes and royalty funding liabilities in the form of interest
and amortization charges. In addition, the conversion option embedded in the convertible notes is recognized
and measured at fair value, where a non-cash fair value adjustment was recognized through finance income
in the year ended December 31, 2023. Similarly, subsequent reporting periods may result in significant non-
cash finance income or expenses. For further details, please refer to Note 16, “Financial Assets and Financial
Liabilities”.
Finance income for the year ended December 31, 2023 was €43.9 million representing a decrease of €8.3
million compared to the year ended December 31, 2022. This decrease was primarily due to €32.4 million
lower exchange rate gains, partly offset by €14.7 million gain on derivative liabilities compared to no gain on
derivative liabilities in 2022 and €9.4 million higher interest income from marketable securities and bank
deposits.
Financial Statements
33
Finance expenses for the year ended December 31, 2023 was €44.1 million representing a decrease of €6.4
million compared to the year ended December 31, 2022. This decrease was primarily due to a gain on
derivative liabilities in 2023 compared to a €15.5 million loss on derivative liabilities in 2022, partly offset by
€13.4 million higher amortization charges and interest on convertible notes and royalty funding liabilities, and
€4.3 million lower transaction costs attributable to the convertible notes financing.
Cash Flows from / (used in) Operating Activities
Cash flows used in operating activities for the year ended December 31, 2023 was €467.4 million, representing
a decrease of €28.3 million compared to the year ended December 31, 2022. This decrease was primarily
attributable to a €117.7 million lower net loss for the year when adjusted for non-operating financial income
and expense, taxes, and non-cash items. Working capital items contributed negatively to operating cash flows
by €99.8 million compared to €12.5 million in 2022, primarily driven by increased commercial activities. In
addition, change in operating cash flow was negatively impacted by higher interest payments of €6.4 million,
primarily related to convertible notes, and €4.5 million higher income taxes paid, partly offset by €8.8 million
higher finance income received.
Cash Flows from / (used in) Investing Activities
Cash flows from investing activities for the year ended December 31, 2023 was €286.5 million, compared to
€61.7 million for the year ended December 31, 2022, representing an increase of €224.7 million in cash flows
from investing activities. This increase was primarily attributable to €222.2 million higher net settlement of
marketable securities in line with our liquidity management strategy, and €2.4 million lower investment in
property, plant and equipment.
Cash Flows from / (used in) Financing Activities
Cash flows from financing activities for the year ended December 31, 2023, was €134.3 million, representing
a decrease of €262.5 million compared to the year ended December 31, 2022. This decrease was primarily
related to €367.0 million lower net proceeds received under the royalty financing in 2023, compared to the
convertible notes financing in 2022, where we also used €105.3 million to repurchase our ADSs.
Liquidity and Capital Resources
Our liquidity and capital resources comprise cash, cash equivalents and marketable securities. As of
December 31, 2023, these amounted to €399.4 million.
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 and oncology, the commercialization of SKYTROFA and YORVIPATH, 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.
As of December 31, 2023, the consolidated statements of financial position presented a negative balance of
equity of €145.7 million. Under Danish corporate law, as Ascendis Pharma A/S, the parent company of the
Company holds a positive balance of equity, the Company is currently not subject to legal or regulatory
requirements to re-establish the balance of equity. There is no direct impact from the negative balance of
equity to the liquidity and capital resources.
Based on our current operating plan, we believe that our existing capital resources as of December 31, 2023
will be sufficient to meet our projected cash requirements for at least twelve months from the date of this annual
report. However, our operating plan may change as a result of many factors currently unknown to us, and we
may need to seek additional funds sooner than planned.
Financial Statements
34
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. The coupon interest is payable semi-annually. Unless earlier converted or redeemed, the convertible
notes will mature on April 1, 2028. Refer to Note 16, “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 our ordinary shares. The holding of treasury shares is disclosed in Note 17,
“Financial Risk Management”.
In September 2023, we entered into a $150.0 million capped synthetic royalty funding agreement (the “Royalty
Pharma Agreement”) with Royalty Pharma Development Funding, LLC (“Royalty Pharma”). Under the terms
of the Royalty Pharma Agreement, in exchange for Royalty Pharma's payment of a cash purchase price of
$150.0 million at closing (the “Purchase Price”), we have agreed to sell Royalty Pharma the right to receive
payment of 9.15% of U.S. net sales of SKYTROFA, beginning on January 1, 2025 (the “Revenue Interest
Payments”). The Revenue Interest Payments to Royalty Pharma will cease upon reaching a multiple of 1.925
times the Purchase Price, or 1.65 times the Purchase Price if Royalty Pharma receives Revenue Interest
Payments in that amount by December 31, 2031. The Royalty Pharma Agreement includes a buy-out option
under various terms and conditions. Obligations under the Royalty Pharma Agreement are presented as part
of borrowings in the consolidated statements of financial position. Further details are provided in Note 16,
“Financial Assets and Liabilities”.
As of December 31, 2023, our cash requirements primarily relate to the following:
• Semi-annual interest payments and potential repayment (April 1, 2028) of principal amount of
convertible notes;
• Payment of 9.15% on net U.S. SKYTROFA revenue to Royalty Pharma, beginning in the
second quarter of 2025;
• Lease obligations related to our office and research and development facilities;
• Purchase obligations under our commercial supply agreements and related activities; and
• Research and development activities related to clinical trials for our product candidates in
clinical development.
Uncertainty Relating to Recognition and Measurement
When preparing the annual report, it is necessary that Management, in accordance with legislative provisions,
makes a number of accounting judgements and estimates which form the basis for the annual report. The
accounting judgements and estimates made by Management are described in Note 3, “Significant Accounting
Judgements and Estimates”.
Risk Management
Business Risks
The Group is exposed to certain risks that are common across the biopharmaceutical industry, including but
not limited to risks that pertain to research and development, regulatory approval, commercialization,
intellectual property rights and access to financing, and some risks that are specific to the Group’s development
programs and technology platform. Some of these risks may significantly affect the Group’s ability to execute
its strategy and in order to mitigate such risks, the Group has identified and categorized these risks as critical
risks and has a program in place to ensure proactive identification, management and mitigation of such risks.
Financial Statements
35
Financial Risks
We regularly monitor the access to domestic and international financial markets, manage the financial risks
relating to our operations, and analyze exposures to risk, including market risk, such as currency risk and
interest rate risk, credit risk and liquidity risk. Financial risk management is further described in Note 17,
“Financial Risk Management”.
Intellectual Capital Resources
The Company is highly dependent on the skills and capabilities of its employees. Employees are considered
one of the most important resources of the Group and Management strives to attract and retain the most
qualified employees to ensure continued development of the Company’s technologies and application of these
technologies towards improvement of existing treatments for significant disease areas.
The skills, knowledge, experience and motivation of the Company’s employees are essential to the continued
development and success of the Company. The employees of the Company are highly educated, and many
have extensive experience within the biopharmaceutical industry and in the development of pharmaceutical
products. Management puts great efforts into organizing the highly skilled employees into effective teams
across the Company’s geographical locations to take advantage of knowledge and experiences across the
various business areas.
Corporate Responsibility
Ascendis Pharma A/S has established a framework of corporate policies and rules which governs compliance
by the Company, its employees and business partners with laws and regulations and with the Ascendis
Pharma Code of Business Conduct & Ethics.
The Ascendis Pharma A/S Sustainability & P|ESG Report 2023 defines our compliance with Section 99a (CSR)
and Section 99d (Data ethics) of the Danish Financial Statements Act.
Find more detailed information in the Ascendis Pharma Corporate Responsibility Report 2023 at:
Diversity (§99b requirements)
The overall gender diversity in leadership positions at Ascendis Pharma meets the Danish gender diversity
requirements, and we have therefore not set targets.
In line with our Gender policy, when defining equal representation, Ascendis Pharma strives for an equal
bi-annual evaluation, so that new initiatives can be discussed and initiated if necessary.
Gender Distribution
2023
Total
M
F
Board of Directors (excluding Executive Officers)
60%
Other Management Levels
52%
Financial Statements
36
Events after the Balance Sheet Date
On January 29, 2024, the Company announced the formation and launch with Frazier Life Sciences of Eyconis,
Inc., a separate company created to develop, manufacture, and commercialize TransCon ophthalmology
assets globally, together with a $150 million commitment from an investor syndicate that includes Frazier, RA
Capital Management, venBio, and HealthQuest Capital.
The Company has granted Eyconis exclusive rights to develop and commercialize TransCon ophthalmology
products globally and received an equity position in the newly formed company. In addition, the Company will
be eligible to receive development, regulatory, and sales milestone payments, plus single digit royalties on
global net sales of commercialized products, if any. Eyconis will initially be based in Redwood City, California,
and certain employees of the Company are expected to join the newly formed company.
No other events have occurred after the reporting date that would influence the evaluation of these financial
statements.
Outlook
We have limited revenue from commercial product sales of SKYTROFA in the U.S. and the EU. We are yet to
commercially launch YORVIPATH in the EU outside of Germany and Austria. Our ability to generate revenue
will continue to depend significantly on our ability to successfully commercialize SKYTROFA in the U.S., to
successfully launch and commercialize SKYTROFA and YORVIPATH in the EU, and to successfully launch
and commercialize TransCon PTH in the U.S., if approved. We will continue to expend substantial resources
for the foreseeable future, including costs associated with research and development and commercialization
activities.
We expect full year 2024 SKYTROFA revenue to be €320 million to €340 million (based on average 2023
exchange rates) and we expect total operating expenses (SG&A and R&D) of approximately €600 million for
2024.
Based on our current operating plan, we believe that our existing capital resources as of December 31, 2023
will be sufficient to meet our projected cash requirements for at least twelve months from the date of this annual
report. However, our operating plan may change as a result of many factors currently unknown to us, and we
may need to seek additional funds sooner than planned. We expect to be operating cashflow break-even on
a quarterly basis by the end of 2024.
Financial Statements
37
Statements of Profit or Loss and Other Comprehensive Income for the Years
Ended December 31
Group
Parent
(EUR’000)
Notes
2023
2022
2023
2022
Statement of Profit or Loss
Revenue
4
Cost of sales
6,11
Gross profit
Research and development costs
6,11
Selling, general and administrative expenses
6,11
Operating profit/(loss)
(455,541
)
(561,814
)
(3,191
)
(177,948
)
Share of profit/(loss) of associate
12
(18,395
)
(17,697
)
Finance income
16
Finance expenses
16
Profit/(loss) before tax
(474,144
)
(577,817
)
(143,079
)
Tax on profit/(loss) for the year
9
(7,303
)
(5,377
)
(3
)
Net profit/(loss) for the year
(481,447
)
(583,194
)
(142,901
)
Attributable to owners of the Company
(481,447
)
(583,194
)
(142,901
)
Basic and diluted earnings/(loss) per share
€ (8.55
€ (10.40
—
—
Number of shares used for calculation (basic and
diluted)
(1)
—
—
Statement of Comprehensive Income
Net profit/(loss) for the year
(481,447
)
(583,194
)
39,716
(142,901
)
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit
or loss
Exchange differences on translating foreign
operations
(2,731
)
(327
)
—
—
Other comprehensive income/(loss) for the year,
net of tax
(2,731
)
(327
)
—
—
Total comprehensive income/(loss) for the year,
net of tax
(484,178
)
(583,521
)
39,716
(142,901
)
Attributable to owners of the Company
(484,178
)
(583,521
)
39,716
(142,901
)
(1)
A total of 6,523,784 warrants outstanding as of December 31, 2023 (a total of 6,864,011 warrants outstanding as of December 31, 2022) can
potentially dilute earnings per share in the future but have not been included in the calculation of diluted earnings per share because they are
antidilutive for the periods presented. Similarly, 575,000 convertible senior notes which were issued in March 2022 can potentially be converted
into 3,456,785 ordinary shares, and can potentially dilute earnings per share in the future but have not been included in the calculation of diluted
earnings per share because they are antidilutive for 2022 and 2023.
Financial Statements
38
Statements of Financial Position as of December 31
Group
Parent
(EUR’000)
Notes
2023
2022
2023
2022
Assets
Non-current assets
Intangible assets
5, 10
889
1,333
Property, plant and equipment
5, 11
28,414
25,344
Investment in associate
12
—
—
Investment in group enterprises
19
146,267
122,759
Receivables from group enterprises
16
1,759,806
1,372,347
Other receivables
16
1,425
1,303
Marketable securities
16, 17
—
7,492
1,936,801
1,530,578
Current assets
Inventories
13
208,931
130,673
Trade receivables
16
—
281
Income tax receivables
739
740
Other receivables
16
18,414
10,949
Prepayments
35,916
27,261
Marketable securities
16, 17
7,275
290,688
Cash and cash equivalents
16
263,909
407,184
535,184
867,776
Total assets
2,471,985
2,398,354
Equity and liabilities
Equity
Share capital
17
7,749
7,675
Distributable equity
(153,446
)
1,793,109
1,678,334
Total equity
(145,697
)
1,800,858
1,686,009
Non-current liabilities
Borrowings
16, 17
395,869
387,555
Lease liabilities
12,011
13,362
Derivative liabilities
16
143,296
157,950
Contract liabilities
14
—
—
Deferred tax liabilities
9
—
—
551,176
558,867
Current liabilities
Borrowings
16, 17
11,226
11,631
Lease liabilities
3,176
2,950
Contract liabilities
14
—
—
Trade payables and accrued expenses
16, 17
85,784
95,174
Payables to group enterprises
16, 17
—
6,558
Other liabilities
19,765
37,165
Income tax payables
—
—
Provisions
15
—
—
119,951
153,478
Total liabilities
671,127
712,345
Total equity and liabilities
2,471,985
2,398,354
Financial Statements
39
Statements of Changes in Equity - Group
Group
Distributable Equity
(EUR’000)
Share
Capital
Share
Premium
Treasury
Shares
Foreign
Currency
Translation
Reserve
Accumulated
Deficit
Total
Equity at January 1, 2022
(21
)
(1,235,508
)
Net profit / (loss) for the period
(583,194
)
(583,194
)
Other comprehensive
income/(loss), net of tax
(327
)
(327
)
Total comprehensive
income/(loss)
(327
)
(583,194
)
(583,521
)
Transactions with Owners
Share-based payment (Note 7)
Acquisition of treasury shares
(134
)
(105,965
)
(106,099
)
Transfer under stock incentive
programs
(6
)
Capital increase
Equity at December 31, 2022
(149
)
(1,860,493
)
Net profit / (loss) for the period
(481,447
)
(481,447
)
Other comprehensive
income/(loss), net of tax
(2,731
)
(2,731
)
Total comprehensive
income/(loss)
(2,731
)
(481,447
)
(484,178
)
Transactions with Owners
Share-based payment (Note 7)
Acquisition of treasury shares
Transfer under stock incentive
programs
(3
)
Net settlement under stock
incentive programs
(1,812
)
(1,812
)
Capital Increase
Equity at December 31, 2023
(146
)
(2,277,095
)
(145,697
)
Financial Statements
40
Statements of Changes in Equity - Parent
Parent
Distributable Equity
(EUR’000)
Share
Capital
Share
Premium
Treasury
Shares
Foreign
Currency
Translation
Reserve
Accumulated
Deficit
Total
Equity at January 1, 2022
7,646
2,107,739
(21
)
(53
)
(249,635
)
1,865,676
Net profit / (loss) for the period
—
—
—
—
(142,901
)
(142,901
)
Total comprehensive
income/(loss)
—
—
—
—
(142,901
)
(142,901
)
Transactions with Owners
Share-based payment (Note 7)
—
—
—
—
64,180
64,180
Acquisition of treasury shares
—
—
(134
)
—
(105,965
)
(106,099
)
Capital increase
29
5,124
—
—
—
5,153
Transfer under stock incentive
programs
—
—
6
—
(6
)
—
Cost of capital increase
—
—
—
—
—
—
Equity at December 31, 2022
7,675
2,112,863
(149
)
(53
)
(434,327
)
1,686,009
Net profit / (loss) for the period
—
—
—
—
39,716
39,716
Total comprehensive
income/(loss)
—
—
—
—
39,716
39,716
Transactions with Owners
Share-based payment (Note 7)
—
—
—
—
66,660
66,660
Acquisition of treasury shares
—
—
3
—
(3
)
—
Net settlement under stock
incentive programs
—
—
—
—
(1,812
)
(1,812
)
Capital Increase
74
10,211
—
—
—
10,285
Equity at December 31, 2023
7,749
2,123,074
(146
)
(53
)
(329,766
)
1,800,858
Financial Statements
41
Cash Flow Statements for the Year Ended December 31
Group
Parent
(EUR’000)
Notes
2023
2022
2023
2022
Operating activities
Net profit/(loss) for the year
(481,447
)
(583,194
)
39,716
(142,901
)
Reversal of finance income
(43,857
)
(52,181
)
(77,624
)
(82,238
)
Reversal of finance expenses
34,714
47,369
Reversal of gain and loss on disposal of property, plant
and equipment
—
—
Reversal of income taxes (expenses)
3
(178
)
Adjustments for non-cash items:
Non-cash consideration regarding revenue
(2,354
)
(2,547
)
—
—
Share of profit/(loss) of associate
—
—
Share-based payment
43,259
40,351
Depreciation
4,267
3,507
Impairment
—
—
Amortization
444
444
Changes in working capital:
Inventories
(78,258
)
(55,268
)
(78,258
)
(59,180
)
Receivables
(32,773
)
(11,531
)
(8,130
)
(2,152
)
Receivables from group enterprises
(350,885
)
(336,518
)
Prepayments
(11,413
)
(6,409
)
(13,158
)
(4,014
)
Contract liabilities (deferred income)
(7,080
)
—
(2,633
)
Trade payables, accrued expenses and other
payables
(26,791
)
51,168
Payables to group enterprises
(6,558
)
(23,285
)
Increase/ (decrease) in provisions
—
—
Cash flows generated from/(used in) operations
(464,271
)
(494,673
)
(439,001
)
(510,260
)
Finance income received
15,283
7,946
Finance expenses paid
(15,672
)
(9,294
)
(12,489
)
(8,072
)
Income taxes received/ (paid)
(4,466
)
(3
)
738
740
Cash flows from/(used in) operating activities
(467,361
)
(495,699
)
(435,469
)
(509,646
)
Investing activities
Investment in group enterprises
(107
)
(25
)
Proceeds from disposal of property, plant and
equipment
—
—
Acquisition of property, plant and equipment
(2,442
)
(14,489
)
(1,230
)
(3,903
)
Reimbursement from acquisition of property, plant and
equipment
—
—
Purchase of marketable securities
(213,842
)
—
(213,842
)
Settlement of marketable securities
288,865
280,528
Cash flows from/(used in) investing activities
287,528
62,758
Financing activities
Payment of principal portion of lease liabilities
(10,438
)
(6,356
)
(2,714
)
(2,455
)
Net proceeds from borrowings
16
—
503,281
Proceeds from exercise of warrants
10,286
5,153
Acquisitions of treasury shares, net of transactions
costs
(105,305
)
—
(105,305
)
Payment of withholding taxes under stock incentive
programs
(1,812
)
(1,812
)
—
Cash flows from/(used in) financing activities
5,760
400,674
Increase/(decrease) in cash and cash equivalents
(46,595
)
(37,194
)
(142,181
)
(46,214
)
Cash and cash equivalents at January 1
407,184
415,363
Effect of exchange rate changes on balances held in
foreign currencies
(6,008
)
(1,094
)
38,035
Cash and cash equivalents at December 31
263,909
407,184
Cash and cash equivalents include
Bank deposits
263,909
390,227
Short-term marketable securities
—
16,957
Cash and cash equivalents at December 31
263,909
407,184
Financial Statements
42
Notes to the 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, 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.
The Company’s registration number in Denmark is 29918791.
On February 2, 2015, the Company completed an initial public offering (“IPO”), 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 approved these financial statements on February 7, 2024. The financial
statements can be obtained from https://datacvr.virk.dk/
Note 2 – Summary of Significant Accounting Policies
Basis of Preparation
The financial statements, which include the consolidated financial statements and the parent financial
statements of Ascendis Pharma A/S, are prepared in accordance with the IFRS Accounting Standards
(“IFRS”), as issued by the International Accounting Standards Board (“IASB”), and as adopted by the European
Union (“EU”). The financial statements include additional disclosures for reporting class C large sized
enterprises as required by the Danish Executive Order on Adoption of IFRS as issued in accordance with the
Danish Financial Statements Act.
The accounting policies applied when preparing the financial statements are described in detail below and are
applied for all entities. Significant accounting judgements and sources of estimation uncertainties used when
exercising the accounting policies are described in Note 3 “Significant Accounting Judgements and Estimates”.
These financial statements have been prepared under the historical cost convention, apart from certain
financial instruments that are measured at fair value at initial recognition.
Changes in Accounting Policies and Disclosures
Several amendments to and interpretations of IFRS applied for the first time in 2023, have not had an impact
on the accounting policies applied by the Company. Thus, the accounting policies applied when preparing
these financial statements have been applied consistently to all the periods presented.
Change to Presentation of Borrowings
At December 31, 2022, lease liabilities were presented as part of borrowings in the statements of financial
position. At December 31, 2022, the carrying amount of lease liabilities was €95.4 million (Parent company:
€13.4 million) and €13.8 million (Parent company: €3.0 million), for non-current liabilities and current liabilities,
respectively.
In connection with entering into additional borrowing activities in September 2023, lease liabilities are
presented separately in the statements of financial position. Comparative figures have been reclassified to
reflect the change in presentation. Accordingly, borrowings comprise convertible senior notes and royalty
funding liabilities.
The change to presentation had no other impact on the financial statements.
Financial Statements
43
Going Concern
The Company’s Board of Directors has, at the time of approving the financial statements, a reasonable
expectation that the Company has adequate resources to continue in operational existence for the foreseeable
future. Thus, the Company continues to adopt the going concern basis of accounting in preparing the financial
statements.
Basis of Consolidation
The consolidated financial statements include the parent company, Ascendis Pharma A/S, and all enterprises
over which the parent company has control. Control of an enterprise exists when the Company has exposure,
or rights to, variable returns from its involvement with the enterprise and has the ability to control those returns
through its power over the enterprise. Accordingly, the consolidated financial statements include Ascendis
Pharma A/S and the subsidiaries listed in Note 20, “Investment in Group Enterprises”.
Consolidation Principles
Subsidiaries, which are enterprises the Company control at the reporting date, are fully consolidated from the
date upon which control is transferred to the Company. They are deconsolidated from the date control ceases.
Control over an enterprise is reassessed if facts and circumstances indicate that there are changes to one or
more of the three elements of control, respectively:
• The contractual arrangement(s) with the other vote holders of the enterprise;
• The Company’s voting rights and potential voting rights; and
• Rights arising from other contractual arrangements.
All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between
group enterprises are eliminated in full on consolidation.
Subsidiaries apply accounting policies in line with the Company’s accounting policies. When necessary,
adjustments are made to bring the entities’ accounting policies in line with those of the Company.
Investment in Associates
An associate is an entity over which the Company has significant influence over financial and operational
decisions but without having control or joint control. The Company’s associate is accounted for using the equity
method and is initially recognized at cost. Thereafter, the carrying amount of the investment is adjusted to
recognize changes in the Company’s share of net assets of the associate since the acquisition or
establishment date.
The consolidated statements of profit or loss include the Company’s share of result after tax of the associate
after any adjustments made to bring the associate’s accounting policies in line with those of the Company.
Transactions between the associate and the Company are eliminated proportionally according to the
Company’s interest in the associate. Unrealized gains and losses resulting from transactions between the
Company and its associate are eliminated to the extent of the Company’s interest in the associate.
On each reporting date, the Company determines whether there are indications that the investment is impaired.
If there is such evidence, the amount of impairment is calculated as the difference between the recoverable
amount of the associate and its carrying amount. Any impairment loss is recognized in the consolidated
statements of profit or loss.
Foreign Currency
Functional and Presentation Currency
Items included in the consolidated financial statements are measured using the functional currency of each
group entity. Functional currency is the currency of the primary economic environment in which the entity
Financial Statements
44
operates. The financial statements are presented in Euros (“EUR”), which is also the functional currency of
the parent company.
Translation of Transactions and Balances
On initial recognition, transactions in currencies other than the individual entity’s functional currency are
translated applying the exchange rate in effect at the date of the transaction. Receivables, payables and other
monetary items denominated in foreign currencies that have not been settled at the reporting date are
translated using the exchange rate in effect at the reporting date. Monetary items carried at fair value that are
denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was
determined.
Exchange rate differences that arise between the rate at the transaction date and the rate in effect at the
payment date, or the rate at the reporting date, are recognized in profit or loss as finance income or finance
expenses. Property, plant and equipment, intangible assets and other non-monetary items that are measured
in terms of historical cost in a foreign currency are translated using the exchange rates as of the dates of the
initial transactions.
Currency Translation of Group Enterprises
When subsidiaries or the associate present their financial statements in a functional currency other than EUR,
their statements of profit or loss are translated at average exchange rates. Balance sheet items are translated
using the exchange rates at the reporting date. Exchange rate differences arising from translation of foreign
entities’ balance sheet items at the beginning of the year to the reporting date exchange rates as well as from
translation of statements of profit or loss from average rates to the exchange rates at the reporting date are
recognized in other comprehensive income. Similarly, exchange rate differences arising from changes that
have been made directly in a foreign subsidiary’s equity are recognized in other comprehensive income.
Revenue
Revenue from Commercial Sale of Products
Revenue is recognized when the customer has obtained control of the goods and it is probable that the
Company will collect the consideration to which it is entitled for transferring the goods. Control is transferred
upon delivery.
Revenue is measured at the contractual sales price, reflecting the consideration received or receivable from
customers, net of value added taxes, and provisions for a variety of sales deductions including prompt pay
discounts, shelf stock adjustments and applicable sales rebates attributed to various commercial
arrangements, managed healthcare organizations, government programs and co-pay arrangements. In
addition, goods are principally sold on a “sale-or-return” basis, where customers may return products in line
with the Company’s return policy. Sales deductions and product returns are considered variable consideration
and are estimated at the time of sale using the expected value method. The amount of variable consideration
that is included in the transaction price may be constrained and is included in the net contractual price only to
the extent that it is probable that a significant reversal will not occur.
Unsettled sales rebates and product returns are recognized as provisions when timing or amount is uncertain.
Payable amounts that are absolute are recognized as other liabilities. Sales discounts and rebates that are
payable to customers are offset in trade receivables.
Other Revenue
Other revenue relates to collaboration and license agreements. In addition, other revenue is generated from
feasibility studies for potential partners to evaluate if TransCon technologies enable certain advantages for
their product candidates of interest. Such feasibility studies are often structured as short-term agreements with
fixed fees for the work that the Company performs.
Financial Statements
45
When contracts with customers are entered into, the goods and/or services promised in the contract are
assessed to identify distinct performance obligations. A promise in the agreement is considered a distinct
performance obligation if both of the following criteria are met:
• the customer can benefit from the good or service either on its own or together with other resources
that are readily available to the customer (i.e., the good or service is capable of being distinct); and
• the entity’s promise to transfer the good or service to the customer is separately identifiable from other
promises in the contract (i.e., the promise to transfer the goods or service is distinct within the context
of the contract).
Under collaboration, license, and other agreements that contain multiple promises to the customer, the
promises are identified and accounted for as separate performance obligations if these are distinct. If promises
are not distinct, those goods or services are combined with other promised goods or services until a bundle of
goods or services that is distinct is identified.
The transaction price in the contract is measured at fair value and reflects the consideration the Company
expects to be entitled to in exchange for those goods or services. Under license agreements, the transaction
price may include up-front payments, royalty and milestone payments. Sales-based royalty and sales-based
milestone income promised in exchange for a license of intellectual property is recognized as revenue at the
later of the occurrence of subsequent sale or satisfaction of the performance obligation to which some of the
royalty has been allocated. Milestone income related to regulatory activities is included in the transaction price
at the point in time that it is highly probable that the applicable criteria are met.
The transaction price is allocated to each performance obligation according to their stand-alone selling prices
and is recognized when control of the goods or services is transferred to the customer, either over time or at
a point in time, depending on the specific terms and conditions in the contracts. License agreements, which
transfer rights to the Company's intellectual property (“IP”), are classified as “right-to-access”, with revenue
recognized over time, or as “right-to-use” with revenue recognized at a point in time.
Research and Development Costs
Research and development costs consist primarily of manufacturing costs, preclinical and clinical study costs
and costs for process optimizations and improvements performed by Clinical Research Organizations
(“CROs”) and Contract Manufacturing Organizations (“CMOs”), salaries and other personnel costs including
pension and share-based payment, the cost of facilities, professional fees, cost of obtaining and maintaining
the Company’s intellectual property portfolio, and depreciation of non-current assets used in research and
development activities.
Research costs are incurred at the early stages of the drug development cycle from the initial drug discovery
and include a variety of preclinical research activities in order to assess potential drug candidates in non-
human subjects, prior to filing an Investigational New Drug Application (“IND”), or equivalent. Research costs
are recognized in the statement of profit or loss when incurred.
Development activities relate to activities following an IND, or equivalent, and typically involve a single product
candidate undergoing a series of studies to illustrate its safety profile and effect on human beings, prior to
obtaining the necessary approval from the appropriate authorities. Development activities comprise drug
candidates undergoing clinical trials starting in phase I (first time drug is administered in a small group of
humans), and further into Phase II and III, which include administration of drugs in larger patient groups.
Following, and depending on clinical trial results, a Biologic License Application (“BLA”) or New Drug
Application ("NDA") may be submitted to the authorities, to apply for marketing approval, which, with a positive
outcome will permit the Company to market and sell the products. Long-term extension trials may be ongoing
following submission of a BLA or NDA.
Development costs also include product development and pre-commercial manufacturing costs related to
development product candidates, and write-downs of inventories manufactured for late-stage development
product candidates prior to marketing approval being obtained (pre-launch inventories).
Due to the risk related to the development of pharmaceutical products, the Company cannot estimate the
future economic benefits associated with individual development activities with sufficient certainty until the
Financial Statements
46
development activities have been finalized and the necessary market approval of the final product has been
obtained. As a consequence, all development costs are recognized in the statement of profit or loss when
incurred.
Selling, General and Administrative Expenses
Selling, general and administrative expenses comprise salaries and other personnel costs including pension
and share-based payment, office supplies, cost of facilities, professional fees, and depreciation of non-current
assets related to selling, general and administrative activities, including pre-commercial activities. Selling,
general and administrative expenses are recognized in the statement of profit or loss when incurred.
Share-based Incentive Programs
Share-based incentive programs comprise warrant programs, Restricted Stock Unit programs (“RSU-
programs”) and Performance Stock Unit Programs (“PSU-programs”). which are classified as equity-settled
share-based payment transactions.
The cost of equity-settled transactions is determined by the fair value at the date of grant. For warrant
programs, the fair value of each warrant granted is determined using the Black-Scholes valuation model. For
RSU-programs and PSU-programs, the fair value of each RSU or PSU granted is equal to the closing share
price on the date of grant of the underlying ADS. Any social security contributions payable in connection with
the grant or exercise of the warrants are recognized as expenses when incurred. The assumptions used for
estimating the fair value of share-based payment transactions are disclosed in Note 7 “Share-based Payment”.
The cost is recognized together with a corresponding increase in equity over the period in which the
performance and/or service conditions are fulfilled (i.e., the vesting period). The fair value determined at the
grant date of the equity-settled share-based payment is expensed on a straight-line basis over the vesting
period for each tranche, based on the best estimate of the number of equity instruments that will ultimately
vest. No expense is recognized for grants that do not ultimately vest.
Where an equity-settled grant is cancelled other than upon forfeiture when vesting conditions are not satisfied,
the grant is treated as if it vested on the date of the cancellation, and any expense not yet recognized for the
grant is recognized immediately.
Where the terms and conditions for an equity-settled grant are modified, the services measured at the grant
date fair value over the vesting period are recognized, subject to performance and/or service conditions that
were specified at the initial grant date(s). Additionally, at the date of modification, unvested grants are re-
measured and any increase in the total fair value is recognized over the vesting period. If a new grant is
substituted for the cancelled grant and designated as a replacement grant on the date that it is granted, the
cancelled and new grants are treated as if they were a modification of the original grant.
The Parent Company, together with its subsidiaries have entered into group share-based payment
arrangements. The Parent Company incurs share-based payment transactions, whereas subsidiaries receive
the services, and the Parent Company incur an obligation to settle the transaction with the subsidiaries. While
the obligations are settled in the Parent Company’s own equity instruments, group share-based payments are
in the Parent Company’s separate financial statements recognized as cost of investment in subsidiaries with
a corresponding increase in equity over the vesting period.
Finance Income and Expenses
Finance income and expenses comprise interest income and expenses and realized and unrealized exchange
rate gains and losses on transactions denominated in foreign currencies, fair value remeasurement gains and
losses on derivative liabilities, and remeasurement gains and losses on royalty funding liabilities.
Interest income and interest expenses are stated on an accrual basis using the principal and the effective
interest rate. The effective interest rate is the discount rate that is used to discount expected future cash
Financial Statements
47
payments or receipts through the expected life of the financial asset or financial liability to the amortized cost
(the carrying amount), of such asset or liability.
Income Taxes
Tax for the year, which consists of current tax for the year and changes in deferred tax, is recognized in the
statement of profit or loss by the portion attributable to the profit or loss for the year and recognized directly in
equity or other comprehensive income by the portion attributable to entries directly in equity and in other
comprehensive income. The current tax payable or receivable is recognized in the statement of financial
position, stated as tax computed on this year’s taxable income, adjusted for prepaid tax.
When computing the current tax for the year, the tax rates and tax rules enacted or substantially enacted at
the reporting date are used. Current tax payable is based on taxable profit or loss for the year. Taxable profit
or loss differs from net profit or loss as reported in the statement of profit or loss because it excludes items of
income or expense that are taxable or deductible in prior or future years. In addition, taxable profit or loss
excludes items that are never taxable or deductible.
Deferred tax is recognized according to the balance sheet liability method of all temporary differences between
carrying amounts and tax-based values of assets and liabilities, apart from deferred tax on all temporary
differences occurring on initial recognition of goodwill or on initial recognition of a transaction which is not a
business combination, and for which the temporary difference found at the time of initial recognition neither
affects profit or loss nor taxable income.
Deferred tax liabilities are recognized on all temporary differences related to investments in subsidiaries and/or
associates, unless the Company is able to control when the deferred tax is realized, and it is probable that the
deferred tax will not become due and payable as current tax in the foreseeable future.
Deferred tax assets, including the tax base of tax loss carry forwards, are recognized in the statement of
financial position at their estimated realizable value, either as a set-off against deferred tax liabilities or as net
tax assets for offset against future positive taxable income. Deferred tax assets are only offset against deferred
tax liabilities if the entity has a legally enforceable right to offset, and the deferred tax assets and deferred tax
liabilities relate to income taxes levied by the same tax jurisdiction. Deferred tax is calculated based on the
planned use of each asset and the settlement of each liability, respectively.
Deferred tax is measured using the tax rates and tax rules in the relevant countries that, based on acts in force
or acts in reality in force at the reporting date are expected to apply when the deferred tax is expected to
crystallize as current tax. Changes in deferred tax resulting from changed tax rates or tax rules are recognized
in the statement of profit or loss unless the deferred tax is attributable to transactions previously recognized
directly in equity or other comprehensive income. In the latter case, such changes are also recognized in equity
or other comprehensive income. On every reporting date, it is assessed whether sufficient taxable income is
likely to arise in the future for the deferred tax asset to be utilized.
Intangible Assets
Goodwill
Goodwill acquired in a business combination is initially measured at cost, being the excess of the aggregate
of the consideration transferred and the amount recognized for non-controlling interests over the net
identifiable assets acquired and liabilities assumed.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not
amortized but is subject to impairment testing at least on a yearly basis. For the purpose of impairment testing,
goodwill acquired in a business combination is allocated to each of the cash-generating units, or group of cash-
generating units, that are expected to benefit from the synergies of the combination. Each cash-generating
unit or group of cash-generating units to which goodwill is allocated represent the lowest level within the
Company at which the goodwill is monitored for internal management purposes.
Financial Statements
48
Software
Software assets comprise administrative applications and serve general purposes to support the Company’s
operations.
Development costs that are directly attributable to the design, customization, implementation, and testing of
identifiable and unique software assets controlled by the Company are recognized as intangible assets from
the time that; (1) the software asset is clearly defined and identifiable; (2) technological feasibility, adequate
resources to complete, and an internal use of the software asset can be demonstrated; (3) the expenditure
attributable to the software asset can be measured reliably; and (4) the Company has the intention to use the
software asset internally. The Company does not capitalize software with no alternative use, or where
economic benefit depends on marketing approvals of drug candidates and where marketing approvals have
not been obtained.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any
accumulated amortization and accumulated impairment losses. Amortization of the asset begins when the
development is complete, and the asset is available for use. Software assets are amortized over the period of
expected future benefits. Amortization is recognized in research and development costs, and selling, general
and administrative expenses, as appropriate. Expenditures that do not meet the criteria above are recognized
as an expense as incurred.
Other Intangible Assets
Intangible assets comprise acquired intellectual property rights in the form of patents and licenses, which are
measured at cost less accumulated amortization and accumulated impairment losses. Cost comprises the
acquisition price and costs directly attributable to the acquisition of the asset. The amortization period is
determined based on the expected economic and technical useful life of the asset, and amortization is
recognized on a straight-line basis over the expected useful life of 5-10 years depending on the planned use
of the specific asset and the lifetime of the patents protecting the intellectual property rights. Subsequent costs
to maintain the intangible assets are recognized as expenses in the period to which they relate.
Property, Plant and Equipment
Property, plant and equipment primarily comprises leasehold improvements, office facilities, and process
equipment and tools which are located at CMOs. Property, plant and equipment also includes right-of-use
assets. Please refer to the section “Leases”.
Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses. Cost
comprises the acquisition price, costs directly attributable to the acquisition and preparation costs of the asset
until the time when it is ready to be used in operation. Subsequent costs are included in the carrying amount
of the asset or recognized as a separate asset, as appropriate, only when it is probable that future economic
benefits associated with the assets will flow to the Company and the costs of the items can be measured
reliably. All repair and maintenance costs are charged to the statement of profit or loss during the financial
periods in which they are incurred.
Plant and equipment acquired for research and development activities with alternative use, which is expected
to be used for more than one year, is capitalized and depreciated over the estimated useful life as research
and development costs. Plant and equipment acquired for research and development activities, which has no
alternative use, is recognized as research and development costs when incurred.
If the acquisition or use of the asset involves an obligation to incur costs of decommissioning or restoration of
the asset, the estimated related costs are recognized as a provision and as part of the relevant asset’s cost,
respectively.
The basis for depreciation is cost less estimated residual value. The residual value is the estimated amount
that would be earned if selling the asset today net of selling costs, assuming that the asset is of an age and a
condition that is expected after the end of its useful life. Cost of a combined asset is divided into smaller
components, with such significant components depreciated individually if their useful lives vary. Depreciation
Financial Statements
49
commences when the asset is available for use, which is when it is in the location and condition necessary for
it to be capable of operating in the manner intended.
Depreciation is calculated on a straight-line basis, based on an asset’s expected useful life, being within the
following ranges:
Process plant and machinery
5-10 years
Other equipment
3-5 years
Leasehold improvements
3-11 years
Right-of-use assets
2-11 years
Depreciation methods, useful lives and residual amounts are reassessed at least annually.
Property, plant and equipment is written down to the lower of recoverable amount and carrying amount, as
described in the “Impairment” section below. Depreciation and impairment losses of property, plant and
equipment is recognized in the statement of profit or loss as cost of sales, research and development costs or
as selling, general and administrative expenses, as appropriate.
Gains and losses on disposal of property, plant and equipment are recognized in the statement of profit or loss
at its net proceeds, as either other income or other expenses, as appropriate.
Investments in Group Enterprises – Parent Company
Investments in group enterprises are recognized and measured at cost. Investments that are measured in
terms of historical cost in a foreign currency are translated using the exchange rates as of the dates of the
initial transactions.
Investments are written down to the lower of recoverable amount and carrying amount which is further
described below in the section “Impairment”.
Impairment
The recoverable amount of goodwill is estimated annually irrespective of any recorded indications of
impairment. Property, plant and equipment and finite-lived intangible assets are reviewed for impairment
whenever events or circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are largely
independent cash inflows, or cash-generating units, which for goodwill represent the lowest level within the
enterprise at which the goodwill is monitored for internal management purposes. Prior impairments of non-
financial assets, other than goodwill, are reviewed for possible reversal at each reporting date.
Inventories
Inventories comprise raw materials, work in progress and finished goods. Work in progress and finished goods
comprise service expenses incurred at CMOs, raw materials consumed, incremental storage and
transportation, other direct materials, and a proportion of manufacturing overheads based on normal operation
capacity.
Inventories are measured at the lower of cost incurred in bringing it to its present location and condition, and
net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less
estimated costs of completion and the estimated costs necessary to make the sale. Cost is measured using
the first-in, first-out method. Work in progress and finished goods are measured under a standard cost method
that takes into account normal levels of consumption, yields, labor, efficiency and capacity utilization.
Production processes are complex, where actual yields and consumptions are sensitive to a wide variety of
manufacturing conditions. Standard cost variances are reviewed regularly and adjusted to ensure inventories
approximate actual cost of production.
Financial Statements
50
If net realizable value is lower than cost, a write-down is recognized as the excess amount by which cost
exceeds net realizable value, as part of cost of sales when incurred. The amount of reversal of write-down of
inventories arising from an increase in net realizable value is recognized as a reduction in cost of sales in the
period in which the reversal occurs.
Manufacturing of pre-launch inventories is initiated for late-stage product candidates where manufacturing
costs are recognized as inventories. However, since pre-launch inventories are not realizable prior to obtaining
marketing approval, pre-launch inventories are immediately written down to zero through research and
development costs. If marketing approval is obtained, prior write-downs of pre-launch inventories are reversed
through research and development costs.
Cost of inventories is recognized as part of cost of sales in the period in which the related revenue is
recognized.
Receivables
Receivables comprise trade receivables, income tax receivables and other receivables.
Trade receivables are classified as financial assets at amortized cost, as these are held to collect contractual
cash flows and thus give rise to cash flows representing solely payments of principal and interest. Trade
receivables are initially recognized at their transaction price and subsequently measured at amortized cost.
Income tax receivables and other receivables related to deposits, VAT and other indirect taxes are measured
at cost less impairment. Carrying amounts of receivables usually equals their nominal value less provision for
impairments.
Prepayments
Prepayments comprise advance payments relating to a future financial period. Prepayments are measured at
cost.
Marketable Securities
Marketable securities may comprise government bonds, treasury bills, commercial papers, and other securities
traded on established markets.
At initial recognition (trade-date), contractual terms of individual securities are analyzed to determine whether
these give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal outstanding ("SPPI-test"). All marketable securities held at the reporting date have passed the SPPI-
test.
Marketable securities are initially recognized at fair value at trade-date, and subsequently measured at
amortized cost under the effective interest method. Interest income is recognized as finance income in the
statement of profit or loss. Marketable securities are subject to an impairment test to accommodate expected
credit loss. Gains and losses are recognized as finance income or expenses in the statement of profit or loss
when the specific security or portfolio of securities is derecognized, modified or impaired.
Marketable securities, having maturity profiles of three months or less after the date of acquisition are
presented as cash equivalents in the statements of financial position, where securities having maturities of
more than three months after the date of acquisition are presented separately as marketable securities as
current (i.e., those maturing within twelve months after the reporting date) or non-current assets, as
appropriate.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash and on-demand deposits with financial institutions, and highly liquid
marketable securities with a maturity of three months or less after the date of acquisition (trade-date). Cash
and cash equivalents are measured at amortized cost.
Financial Statements
51
Allowance for Expected Credit Losses on Financial Assets
Financial assets comprise receivables (excluding receivables relating to VAT, other indirect tax and income
tax), marketable securities and cash and cash equivalents. Impairment of financial assets is determined on
the basis of a forward-looking Expected Credit Loss (“ECL”) model. ECLs are based on the difference between
the contractual cash flows due in accordance with the contract and the cash flows expected to be received,
discounted by an approximation of the original effective interest rate.
For receivables, a simplified approach in calculating ECLs is applied. Therefore, changes in credit risks are
not tracked, but instead, a loss allowance based on lifetime ECL is assessed at each reporting date. Lifetime
ECLs are assessed on historical credit loss experience, adjusted for forward-looking factors specific to the
counterparts and the economic environment.
For cash, cash equivalents and marketable securities, ECLs are assessed for credit losses that result from
default events that are possible within the next twelve months (12-month ECL). Credit risk is continuously
tracked and monitored in order to identify significant deterioration. For those credit exposures for which there
has been a significant increase in credit risk since initial recognition, an allowance is recognized for credit
losses expected over the remaining life of the exposure, irrespective of the timing of the default.
Shareholders’ Equity
The share capital comprises the nominal amount of the parent company’s ordinary shares, each at a nominal
value of DKK 1, or approximately €0.13. All shares are fully paid.
Share premium comprises the amounts received, attributable to shareholders’ equity, in excess of the nominal
amount of the shares issued at the parent company’s capital increases, reduced by any expenses directly
attributable to the capital increases. Under Danish legislation, share premium is an unrestricted reserve that
is available to be distributed as dividends to a company’s shareholders. Also, under Danish legislation, the
share premium reserve can be used to offset accumulated deficits.
Treasury shares reserve comprise nominal amounts of holding of own equity instruments. No gain or loss is
recognized in profit or loss on the purchase, sale, transfer or cancellation of the Company’s own equity
instruments. The treasury shares reserve is part of unrestricted reserves and accordingly, reduce the amount
available to be distributed as dividends to the Company’s shareholders.
Foreign currency translation reserve includes exchange rate adjustments relating to the translation of the
results and net assets of foreign operations from their functional currencies to the presentation currency. The
accumulated reserve of a foreign operation is reclassified to the statement of profit or loss at the time the
Company loses control, and thus cease to consolidate such foreign operation. The foreign currency translation
reserve is an unrestricted reserve that is available to be distributed as dividends to the Company’s
shareholders.
Retained earnings/(accumulated deficit) represents the accumulated profits or losses from the Company’s
operations, including corresponding entries to share-based payments recognized in the statement of profit or
loss, arising from warrant programs, RSU-programs and PSU-programs. In addition, premium from acquisition
and sale of treasury shares are recognized as part of this reserve. A positive reserve is available to be
distributed as dividends to the Company’s shareholders.
Convertible Senior Notes and Embedded Derivative Liabilities
Convertible senior notes (“convertible notes”) are separated into a financial liability and an embedded
derivative component based on the terms and conditions of the contract. The embedded derivative component
is accounted for separately if it is not deemed closely related to the financial liability.
The convertible notes include an embedded equity conversion option which is not deemed closely related to
the financial liability, and initially recognized and measured separately at fair value as derivative liabilities
based on the stated terms upon issuance of the convertible notes. The conversion option is classified as a
foreign currency conversion option and thus not convertible into a fixed number of shares for a fixed amount
Financial Statements
52
of cash. Accordingly, the conversion option is subsequently recognized and measured as a derivative liability
at fair value through profit or loss, with any subsequent remeasurement gains or losses recognized as part of
finance income or expenses.
In addition, the convertible notes include a redemption option, which entitle the Company to redeem the notes
at a cash amount equal to the principal amount of the convertible notes, plus accrued and unpaid interest. The
redemption option is closely related to the financial liability, and not separately accounted for. The initial
carrying amount of the financial liability component including the redemption option is the residual amount of
the proceeds, net of transaction costs, after separating the derivative component.
Transaction costs are apportioned between the financial liability and derivative component based on the
allocation of proceeds when the instrument is initially recognized. Transaction costs apportioned to the
financial liability component form part of the effective interest and are amortized over the expected lifetime of
the liability. Transaction costs allocated to the derivative component are expensed as incurred.
The financial liability is subsequently measured at amortized cost until it is extinguished on conversion, optional
redemption or upon repayment at maturity. The financial liability is presented as part of borrowings on the
statement of financial position.
Royalty Funding Liabilities
Royalty funding liabilities relate to the Company’s contractual obligations to pay a predetermined percentage
of future commercial revenue until reaching a predetermined multiple of proceeds received, pursuant to the
detailed provisions of the capped synthetic royalty funding agreement (the “Royalty Funding Agreement”).
Where relevant, royalty funding liabilities are separated into a financial liability and embedded derivative
components based on the terms and conditions of the Royalty Funding Agreement. Embedded derivative
components are accounted for separately, unless these are deemed closely related to the financial liability.
The Royalty Funding Agreement includes a buy-out option where the value is dependent on non-financial
variables that are specific to the Company. Accordingly, the buy-out option is not accounted for separately as
a derivative.
The financial liability is recognized when the Company becomes party to the contractual provisions of the
Royalty Funding Agreement and measured at amortized cost until it is extinguished upon exercising a buy-out
option or upon achieving the predetermined multiple of proceeds received. The effective interest rate is
estimated at initial recognition and takes into account incremental transaction costs and anticipated amount
and timing of future cash flows, which further depends on future commercial revenue forecasts and the
probability of exercising the buy-out option. The amortized cost is remeasured prospectively when there is a
material change in expectations to amount and timing of future cash flows, which will increase or decrease
future interest expenses. Remeasurement gain or losses are recognized through the profit or loss as finance
income or expenses, respectively.
The financial liability is presented as part of borrowings in the statement of financial position.
Leases
Right-of-use Assets
Right-of-use assets are recognized at the lease commencement date, defined as the date the underlying asset
is available for use. Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets
include the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or
before the commencement date less any incentives received. In addition, right-of-use assets also include an
estimate of costs to be incurred by the Company in dismantling or restoring the underlying asset to the
condition required by the terms and condition of the lease, if any.
Financial Statements
53
Right-of-use assets are presented as part of property, plant and equipment, and depreciated on a straight-line
basis over the shorter of the lease term and the estimated useful lives of the assets.
Lease Liabilities
At the lease commencement date, lease liabilities are recognized and measured at the present value of fixed
lease payments and variable lease payments that depend on an index or a rate, whereas variable lease
payments and payments related to non-lease components are excluded. Variable lease payments that do not
depend on an index or a rate are recognized as expenses in the statement of profit or loss when incurred.
When interest rates implicit in the lease contracts are not readily available, the present value of lease payments
are calculated by applying the incremental borrowing rate of the relevant entity holding the lease. Following
the commencement date, the incremental borrowing rate is not changed unless the lease term is modified, or
if the lease payments are modified and this modification results from a change in floating interest rates. From
the lease commencement date and over the lease term, the carrying amount of lease liabilities is increased to
reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of
lease liabilities is remeasured if there is a modification, a change in lease term, or a change in lease payments,
including changes to future payments resulting from a change in an index used to determine such lease
payments.
Provisions
Provisions comprise unsettled sales deductions and product returns regarding sale of commercial products
where amount or timing of payment is uncertain.
Provisions for sales deductions attributed to various commercial arrangements, managed healthcare
organizations, government programs, and co-pay arrangements are recognized when the related sales takes
place and measured using the expected value method. Payable amounts for managed healthcare
organizations and government programs are generally settled within 90-180 days from the transaction date.
Provisions for estimated product returns are measured according to contractual sales price based on expected
product returns.
Trade Payables and Accrued Expenses
Trade payables and accrued expenses are measured at amortized cost.
Other Liabilities
Other liabilities comprise payables to public authorities, short-term employee benefits, and sales rebates.
Other liabilities are measured at their net-realizable values.
Contract Liabilities
Contract liabilities comprise deferred income from collaboration agreements and license agreements, where
consideration received does not match the individual deliverables with respect to amount and satisfied
performance obligations.
Contract liabilities are measured at the fair value of the consideration received and is recognized as revenue
in the statement of profit or loss when the relevant performance obligation, to which the deferred income
relates, is satisfied.
Cash Flow Statement
The cash flow statement shows cash flows from operating, investing and financing activities as well as cash
and cash equivalents at the beginning and the end of the financial year.
Financial Statements
54
Cash flows from operating activities are presented using the indirect method and calculated as the profit or
loss adjusted for non-cash items, working capital changes as well as finance income, finance expenses and
income taxes paid.
Cash flows from investing activities include payments in connection with acquisition, development,
improvement and sale, etc., of property, plant and equipment, investment in associate and marketable
securities.
Cash flows from financing activities comprise payments related to the capital structure of the Company,
including lease liabilities, changes in the share capital and treasury shares and issuance and payments under
the Company's borrowing activities.
The effect of exchange rate changes on cash and cash equivalents held or due in a foreign currency is
presented separately from cash flows from operating, investing and financing activities. Cash flows in
currencies other than the functional currency are recognized in the cash flow statement, using the average
exchange rates.
Cash and cash equivalents comprise cash and on-demand bank deposits with financial institutions, cash held
by service providers for the purpose of meeting short-term cash commitments, and highly liquid marketable
securities with a maturity of three months or less after the date of acquisition.
Basic Earnings per Share
Basic Earnings per Share (“EPS”) is calculated as the consolidated net income or loss from continuing
operations for the period divided by the weighted average number of ordinary shares outstanding. The
weighted average number of shares takes into account the weighted average effect of changes in treasury
shares during the year.
Diluted Earnings per Share
Diluted EPS is calculated as the consolidated net income or loss from continuing operations for the period
divided by the weighted average number of ordinary shares outstanding adjusted for the weighted average
effect of changes in treasury shares during the year, and the dilutive effect of outstanding warrants and
convertible notes. If the consolidated statement of profit or loss shows a net loss, no adjustment is made for
the dilutive effect, as such effect would be anti-dilutive.
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 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:
• What is meant by a right to defer settlement;
• That a right to defer must exist at the end of the reporting period;
• That classification is unaffected by the likelihood that an entity will exercise its deferral right; and
• That only if an embedded derivative in a convertible liability is itself an equity instrument would the
terms of a liability not impact its classification.
The amendments are effective for annual reporting periods beginning on or after January 1, 2024 and must
be applied retrospectively. The amendments require the convertible notes (presented as part of borrowings on
the statement of financial position) and derivative liabilities, presented as non-current liabilities at
Financial Statements
55
December 31, 2023, to be presented as current liabilities. On December 31, 2023, the carrying amount of
convertible notes and derivative liabilities were €407.1 million and €143.3 million, respectively.
The financial statements are not expected to be affected by other new or amended standards.
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.
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 have not revealed
any material impact in any of the years presented in the financial statements.
Significant Accounting Judgements
Critical accounting judgements which have a material impact on the financial statements are described in the
following sections.
Internally Generated Intangible Assets
Development of Drug Candidates
IAS 38, “Intangible Assets” prescribes that intangible assets arising from development projects must be
recognized in the statements of financial position if the criteria for capitalization are met. That means (1) that
the development project is clearly defined and identifiable; (2) that technological feasibility, adequate resources
to complete and a market for the product or an internal use of the project can be documented; (3) that the
expenditure attributable to the development project can be measured reliably; and (4) that the Company has
the intent to produce and market the product. Such an intangible asset shall be recognized if it can be
demonstrated that the future income from the development project will exceed the aggregate cost of
development, production, sale and administration of the product.
Due to the risk associated with drug development, future income from development projects related to drug
candidates cannot be determined with sufficient certainty until the development activities have been completed
and the necessary marketing approvals have been obtained. Accordingly, the Company does not recognize
internally generated intangible assets at this time.
Significant Estimation Uncertainties
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date, which have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below.
Revenue and Provisions
Provision for Sales Rebates and Product Returns
Sales rebates and product returns are considered variable consideration and constrained to the extent that a
significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties
associated with the rebate item are subsequently resolved, or for product returns, when the sold products are
distributed to patients.
Financial Statements
56
Provisions for unsettled sales deductions and product returns are estimated on the basis of a percentage of
sales as defined by individual agreements and contracts, and for government rebates by individual state- and
plan agreements. Further input in the calculations is based on payer channel mix, current contract prices under
eligible programs, patient groups and current inventory levels in the distribution channels. Provisions are
adjusted to absolute amounts and recognized as other liabilities when estimated sales rebates and returns are
processed.
As of December 31, 2023, the provisions for sales rebates and product returns was €32.7 million compared to
€7.3 million, as of December 31, 2022. Roll forward table for total provisions is provided in Note 15,
“Provisions”.
Share-Based Payment
Warrant Compensation Costs
IFRS 2, “Share-Based Payment” requires an entity to reflect in its statement of profit or loss and financial
position, the effects of share-based payment transactions. Warrant compensation costs are recognized as
cost of sales, research and development costs or selling, general and administrative expenses, as appropriate,
over the vesting period, based on management’s best estimate of the number of warrants that will ultimately
vest, which is subject to uncertainty.
Warrant compensation costs are measured according to the grant date fair value of the warrants granted.
Estimating fair values requires the Company to apply generally accepted valuation models and apply these
models consistently according to the terms and conditions of the specific warrant program. Under all warrant
programs, the Black-Scholes option-pricing model has been applied to determine the fair value of warrants
granted. Subjective judgements and assumptions, which are subject to estimation uncertainties, need to be
exercised in determining the appropriate input to the valuation model. These inputs include expected volatility
of the Company’s share price for a historic period equaling the expected lifetime of the warrants, reflecting the
assumption that the historical volatility over a period similar to the life of the warrants is indicative of future
trends.
In 2021, the Company has for the first time, in connection with determining the grant date fair value of warrants
and accordingly, warrant compensation costs, applied the price of the Company’s ADSs, each representing
one ordinary share of the Company, as input for expected volatility. Until December 31, 2020, the expected
volatility was calculated using a simple average of daily historical data of comparable publicly traded
companies, as the Company did not have sufficient data for the volatility of the Company’s own share price.
Please refer to Note 7 “Share-based Payment”, for additional details on the Company’s warrant program and
option-pricing model input.
Warrant compensation cost recognized in the consolidated statement of profit or loss was €28.8 million, and
€55.2 million for the years ended December 31, 2023, and 2022, respectively.
Valuation of Embedded Derivatives
Foreign currency conversion options embedded in the convertible notes are accounted for separately as
derivative liabilities 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 use of valuation techniques in the form of the Black-Scholes
Option Pricing model. Subjective judgements and assumptions, which are subject to estimation uncertainties,
need to be exercised in determining the appropriate unobservable input to the valuation model (Level 3 in the
fair value hierarchy). This includes volatility of the Company’s share price for a historic period, reflecting the
assumption that the historical volatility is indicative of a period similar to the expected lifetime of the options.
As of December 31, 2023, the derivative liabilities was €143.3 million compared to €158.0 million as of
December 31, 2022. Changes in assumptions relating to these factors could affect the reported fair value of
derivative liabilities. Refer to Note 16 “Financial Assets and Liabilities”, for additional details.
Financial Statements
57
Measurement of Royalty Funding Liabilities
The carrying amount of royalty funding liabilities is measured according to anticipated future cash flows, which
further depends on the amount and timing of future commercial revenue. Assumptions that impact amount and
timing of future commercial revenue are subject to estimation uncertainties, and subject to a number of factors
which are not within the Company's control.
The Company will periodically revisit anticipated amount and timing of future commercial revenue and to the
extent such amount or timing is materially different from the current estimates, a remeasurement gain or loss
is recognized through the profit or loss as finance income or expenses, respectively, which would further
increase or decrease future interest expenses. Further details are provided in Note 16 “Financial Assets and
Liabilities”.
As of December 31, 2023, the carrying amount of the royalty funding liabilities was €138.4 million.
Note 4 – Revenue
Revenue has been recognized in the statements of profit or loss with the following amounts:
Group
Parent
(EUR’000)
2023
2022
2023
2022
Revenue
Commercial sale of products
178,663
35,659
54,710
9,562
Rendering of services
21,659
4,434
243,002
93,179
Sale of clinical supply
319
8,534
—
—
Licenses
66,077
2,547
5,000
2,633
Total revenue
266,718
51,174
302,712
105,373
Attributable to
Commercial customers
178,663
35,659
—
—
Collaboration partners and license agreements
88,055
15,515
—
552
Group enterprises
—
—
302,712
104,821
Total revenue
266,718
51,174
302,712
105,373
Specified by timing of recognition
Recognized over time
21,659
4,434
243,002
93,179
Recognized at a point in time
245,059
46,740
59,710
12,194
Total revenue
266,718
51,174
302,712
105,373
Specified per geographical location
Europe
869
552
—
552
North America
191,677
44,156
—
—
Asia
74,172
6,466
—
—
Denmark (domicile country)
—
—
302,712
104,821
Total revenue
266,718
51,174
302,712
105,373
Commercial Customers
Revenue to commercial customers relates to sale of SKYTROFA® (lonapegsomatropin-tcgd), primarily in the
U.S. market, which is sold to specialty pharmacies and specialty distributors. In addition, the Company began
shipping products to wholesalers in Germany in the third quarter of 2023. Customer payment terms are
typically 30 days from the transaction date.
In both 2023 and 2022, four commercial customers represented more than 10% of sale to commercial
customers.
Financial Statements
58
Collaboration Partners and License Agreements
On November 29, 2023, the Company entered into an exclusive license agreement with Teijin Limited (the
"Teijin Agreement") for the further development and commercialization of TransCon hGH, TransCon PTH, and
TransCon CNP for endocrinology rare disease (the “Licensed Products”) in Japan. Under the terms of the
Teijin Agreement, the Company received an upfront payment of $70 million, with additional development and
regulatory milestones of up to $175 million and commercial milestones. In addition, the Company is eligible to
receive royalties on net sales of the Licensed Products in Japan, of up to mid-20’s percent.
Further, the Company will provide clinical and commercial supply, and development services for joint activities,
which are subject to separate remuneration, and which will be recognized as revenue over time as rendering
of services or reimbursement revenue, as applicable.
At December 31, 2023, none of the Licensed Products have received marketing authorization in Japan and no
services has been provided by the Company. The Licensed Products are patent protected, where future
activities do not affect their existing stand-alone functionalities. Accordingly, all three licenses have been
classified as “right-to-use” licenses, with revenue recognized at a point in time, where the licensee is granted
access to the IP. For the year ended December 31, 2023, “Licenses” includes upfront payment of $70 million,
which is allocated to license of the Company’s IP.
Development and regulatory milestones of up to $175 million are recognized as revenue when the milestone
criteria specific to the licensed product are met. Royalty and commercial milestone income is recognized as
revenue when the subsequent product sales occur.
For the year ended December 31, 2023, no revenue from royalties or milestones has been recognized under
the Teijin Agreement.
Revenue from collaboration partners and license agreements also includes license income, rendering of
services and sale of clinical supply under three licenses agreements with VISEN Pharmaceuticals, which were
entered into in 2018.
Note 5 – Segment Information
The Company is managed and operated as one business unit. No separate business areas or separate
business units have been identified in relation to product candidates or geographical markets. Accordingly,
except for entity wide disclosures, no information on business segments or geographical markets is disclosed.
Entity wide disclosures regarding revenue are included in Note 4 “Revenue”.
The Company’s intangible assets and property, plant and equipment located by country or region are specified
below, and defines the Company’s non-current segment assets:
Group
(EUR’000)
2023
2022
Non-current segment assets
Denmark (domicile country)
32,893
30,336
North America
68,589
89,439
Europe
13,571
14,148
Total non-current segment assets
115,053
133,923
Investment in associate
5,686
22,932
Marketable securities
—
7,492
Other receivables
2,127
1,920
Total non-current assets
122,866
166,267
The Parent Company has no non-current segment assets outside Denmark (domicile country).
Financial Statements
59
Note 6 – Employee costs
Group
Parent
(EUR’000)
2023
2022
2023
2022
Employee costs
Wages and salaries
170,278
140,420
70,561
54,112
Share-based payment
66,660
64,180
43,259
40,351
Pension costs (defined contribution plans)
4,403
4,163
2,086
1,887
Social security costs
12,877
10,627
559
325
Other employee costs
4,238
4,411
2,605
2,359
Total employee costs
258,456
223,801
119,070
99,034
Included in the profit or loss
Cost of sales
(1)
15,748
7,239
15,748
7,239
Research and development costs
127,002
122,581
57,756
56,736
Selling, general, and administrative expenses
115,706
93,981
45,566
35,059
Total employee costs
(2)
258,456
223,801
119,070
99,034
Average number of employees
404
325
(1) Cost of sales includes employee costs capitalized as part of inventories.
(2) At December 31, 2023, “Employee costs” has been extended to also include “Other employee costs”, which comprise other
external costs associated with employment. In addition, “Social security costs” have been adjusted to also include various
insurance programs. Comparative amounts have been reclassified to reflect the change in presentation.
Key Management Personnel comprises the Board of Directors (the “Board”), the Executive Board and Non-
executive Senior Management. Compensation to Key Management Personnel comprises salaries,
participation in annual bonus schemes, and share-based compensation. Share-based compensation is
elaborated in further details in the section “Share-based Payment”.
Compensation to Key Management Personnel included within total employee costs is summarized below:
Board of Directors
(1)
Executive Board
(2)
Non-executive
Senior Management
(EUR’000)
2023
2022
2023
2022
2023
2022
Compensation
Wages and salaries
543
403
4,375
3,809
4,673
6,087
Share-based payment
1,276
1,273
13,243
11,392
9,529
8,872
Pensions (defined contribution plans)
—
—
54
46
122
118
Social security costs
—
—
103
55
45
89
Other employee costs
—
—
20
20
40
45
Total Compensation
1,819
1,676
17,795
15,322
14,409
15,211
(1) The Board of Directors comprised six to seven persons in 2023 and 2022.
(2) The Executive Board comprised four persons in 2023 and 2022.
Note 7 – Share-based Payment
As an incentive to employees, members of the Board and select consultants, the Company has established
warrant programs. In December 2021, the Company established a Restricted Stock Unit programs (“RSU
program”), and in March 2023, a Performance Stock Unit Program. All programs are classified as equity-settled
share-based payment transactions.
Restricted Stock Unit Program
Restricted Stock Units (“RSUs”) are granted by the Board in accordance with authorizations given to it by the
shareholders of Ascendis Pharma A/S to the Executive Board, select employees and members of the Board
(“RSU-holders”) in accordance with the Company’s RSU Program adopted in December 2021. Further, RSUs
may be granted to select consultants. 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 or waived by the Board at its discretion.
ADSs underlying RSUs are treasury shares that have been repurchased in the market.
Financial Statements
60
Performance Stock Unit Program
Performance Stock Units ("PSUs") are granted by the Board to certain members of senior management and
the Executive Board (the “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.
Vesting Conditions
RSUs granted vest over a predetermined service period, and accordingly require RSU-holders to be employed,
or provide a specified period of service. RSUs vest over three years with 1/3 of the RSUs vesting on each
anniversary date from the date of grant. RSUs generally cease to vest from the date of termination of
employment, or for the Board, termination of board membership, whereas unvested RSUs will lapse. In
addition, vesting may be contingent upon additional vesting criteria (non-market performance conditions).
PSUs vest in a manner similar to the service conditions of the RSUs; however, vesting is also contingent upon
achievement of performance targets (non-market performance conditions) 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 targets 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 be forfeited. 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.
Settlement Options
All RSUs and PSUs are settled at the time of vesting by transfer of treasury shares that are ADSs repurchased
in the market. In jurisdictions where the Company is required to withhold and settle tax with the tax authority
on behalf of the RSU/PSU-holders, the Company withholds the number of RSUs or PSUs that are equal to the
estimated monetary value of the RSU/PSU-holders tax obligation from the total number of RSUs or PSUs that
otherwise would have been transferred to the RSU/PSU holder upon vesting. These settlements are presented
as “Net settlement under stock incentive programs” in the consolidated statement of equity.
Upon vesting, the Company may at its sole discretion choose to make a cash settlement instead of delivering
ADSs.
Adjustments
RSU-holders and PSU-holders are entitled to an adjustment of the number of RSUs or PSUs granted, in the
event of certain corporate changes, including among other events, increases or decreases to the share capital
at a price below or above market value, the issuance of bonus shares, and changes in the nominal value of
each share. In addition, the RSU and PSU Programs contain provisions to accelerate vesting, or compensate
with grant of new equity instruments, in the event of restructuring events including change in control events.
Financial Statements
61
RSU and PSU Activity
The following table specifies the number of RSUs and PSUs granted and outstanding at December 31, 2023:
Total RSUs
Total PSUs
Total
Outstanding at January 1, 2022
148,148
—
148,148
Transferred during the period
(41,685
)
—
(41,685
)
Forfeited during the period
(23,971
)
—
(23,971
)
Outstanding at December 31, 2022
82,492
—
82,492
Granted during the period
609,860
112,268
722,128
Settled during the period
(18,132
)
—
(18,132
)
Transferred during the period
(20,098
)
—
(20,098
)
Forfeited during the period
(77,497
)
(7,245
)
(84,742
)
Outstanding at December 31, 2023
576,625
105,023
681,648
Specified by vesting date
2024
217,615
35,007
252,622
2025
179,482
35,008
214,490
2026
179,528
35,008
214,536
Outstanding at December 31, 2023
576,625
105,023
681,648
The fair value of one RSU at date of grant was €105.96 for the year ended December 31, 2023. PSU's were
granted for the first time in 2023. The fair value of one PSU at the date of grant was € 105.96.
Warrant program
Warrants are granted by the Board of Directors in accordance with authorizations given to it by the
shareholders of Ascendis Pharma A/S to all employees, members of the Board of Directors and select
consultants (“warrantholders”). Each warrant carries the right to subscribe for one ordinary share of a nominal
value of DKK 1. The exercise price is fixed at the fair market value of the Company’s ordinary shares at the
time of grant as determined by the Board of Directors. Vested warrants may be exercised in two or four annual
exercise periods as described below. Apart from exercise prices and exercise periods, the programs are
similar.
Vesting Conditions
Warrants granted vest over a predetermined service period, and accordingly require warrantholders to be
employed, or provide a specified period of service. Warrants generally cease to vest from the date of
termination in the event that (i) the employee terminates the employment contract and the termination is not a
result of breach of the employment terms by the Company, or (ii) in the event that the Company terminates
the employment contract, and the employee has given the Company good reason to do so. In relation to board
members, the vesting shall cease on the termination date of the board membership regardless of the reason.
In relation to consultants, the vesting shall cease on the termination date of the consultancy relationship. The
warrantholder will, however, be entitled to exercise vested warrants in the first exercise period after termination.
In the event that the employment contract is terminated, and the employee has not given the Company good
reason to do so, the warrantholder may keep the right to continued vesting and exercise of warrants as if the
employment was still in effect. In such case, any expense not yet recognized for the outstanding warrants is
recognized immediately.
Warrants granted until November 2021
Warrants granted from 2012 until November 2021, generally vest over 48 months with 1/48 of the warrants
vesting per month from the date of grant. However, effective from January 2015, certain warrants granted to
board members vest over 24 months with 1/24 of the warrants vesting per month from the date of grant.
Financial Statements
62
Warrants granted from December 2021
For warrants granted to employees and consultants, 25% of the warrants vest one year after the date of grant,
and the remaining 75% of the warrants granted vest over 36 months, with 1/36 of the warrants vesting per
month, from one year after the date of grant.
For warrants granted to board members upon the board members accession, 25% of the warrants granted
vest one year after the date of grant, and the remaining 75% of the warrants granted shall vest over 36 months,
with 1/36 per month from one year after the date of grant. Regarding subsequent grants of warrants to board
members, 50% of the warrants vest one year after the date of grant, and the remaining 50% of the warrants
vest over 12 months, with 1/12 per month from one year after the date of grant.
Exercise Periods
Vested warrants may be exercised during certain exercise periods each year, within certain periods after
publication of earnings data of a fiscal quarter, interim and annual reports, as per each program's terms and
conditions.
Warrants expire ten years after the grant date. Warrants not exercised by the warrantholder during the last
exercise period shall become null and void without further notice or compensation or payment of any kind to
the warrantholder. If the warrantholder is a consultant, advisor or board member, the exercise of warrants is
conditional upon the warrantholder’s continued service to the Company at the time the warrants are exercised.
If the consultant’s, advisor’s or board member’s relationship with the Company should cease without this being
attributable to the warrantholder’s actions or omissions, the warrantholder shall be entitled to exercise vested
warrants in the pre-defined exercise periods.
Adjustments
Warrantholders are entitled to an adjustment of the number of warrants issued and/or the exercise price
applicable in the event of certain corporate changes. Events giving rise to an adjustment include, among other
things, increases or decreases to our share capital at a price below or above market value, the issuance of
bonus shares, changes in the nominal value of each share, and payment of dividends in excess of 10% of the
Company’s equity.
Warrant Activity
The following table specifies number and weighted average exercise prices of, and movements in warrants
during the year:
Total Warrants
Weighted
Average
Exercise Price
EUR
Outstanding at January 1, 2022
7,085,073
80.30
Granted during the year
357,092
100.40
Exercised during the year
(1)
(214,613
)
21.83
Forfeited during the year
(363,541
)
123.62
Outstanding at December 31, 2022
6,864,011
81.30
Vested at the reporting date
4,972,026
66.34
Granted during the year
395,275
91.07
Exercised during the year
(1)
(555,144
)
17.76
Forfeited during the year
(180,358
)
115.79
Outstanding at December 31, 2023
6,523,784
86.38
Vested at the reporting date
5,273,056
80.02
(1) The weighted average share price (listed in $) at the date of exercise was €98.10 and €113.60 for the years ended December 31, 2023 and 2022,
respectively.
Financial Statements
63
At December 31, 2023, the Board of Directors was authorized to grant up to 1,564,221 additional warrants to
employees, board members and select consultants without preemptive subscription rights for the shareholders
of Ascendis Pharma A/S.
The following table specifies the weighted average exercise prices and weighted average remaining
contractual life for outstanding warrants at December 31, 2023, per grant year.
Number of
Warrants
Weighted
Average
Exercise
Price EUR
Weighted
Average Life
(months)
Granted before January 1, 2021
4,717,462
75.54
60
Granted in 2021
1,135,647
121.77
94
Granted in 2022
296,480
100.28
102
Granted in 2023
374,195
90.73
113
Outstanding at December 31, 2023
6,523,784
86.38
71
At December 31, 2023, the exercise prices of outstanding warrants under the Company’s warrant programs
range from €11.98 to € 145.50 depending on the grant dates.
The range of exercise prices for outstanding warrants was €6.48 to €145.50 for the year ended December 31,
2022.The weighted average remaining life for outstanding warrants was 77 months for the financial year ended
December 31, 2022.
Warrant Compensation Costs
Warrant compensation costs are recognized in the statements of profit or loss over the vesting period of the
warrants granted.
Warrant compensation costs are determined with basis in the grant date fair value of the warrants granted and
recognized over the vesting period. Fair value of the warrants is calculated at the grant dates by use of the
Black-Scholes Option Pricing model with the following assumptions: (1) an exercise price equal to the
estimated market price of the Company’s shares at the date of grant; (2) an expected lifetime of the warrants
determined as a weighted average of the time from grant date to date of becoming exercisable and from grant
date to expiry of the warrants; (3) a risk-free interest rate equaling the effective interest rate on a Danish
government bond with the same lifetime as the warrants; (4) no payment of dividends; and (5) an expected
volatility using the Company’s own share price (from 2021).
The following table summarizes the input to the Black-Scholes Option Pricing model and the calculated fair
values for warrant grants in 2023 and 2022:
2023
2022
Expected volatility
49-51 %
48 - 49%
Risk-free interest rate
2.40 - 2.97 %
(0.08) - 2.54 %
Expected life of warrants (years)
6.0
6.0
Weighted average exercise price
€ 91.07
€ 100.40
Fair value of warrants granted in the year
€ 37.34 - 52.03
€ 36.55 - 60.85
Note 8 – Principal Accountant Fees and Services
The following table sets forth, for each of the years indicated, the fees billed by the Company’s independent
public accountants and the proportion of each of the fees out of the total amount billed by the accountants.
Financial Statements
64
Group
(EUR’000)
2023
2022
Principal accountant fees and services
Audit fees
739
814
Tax fees
122
138
Total principal accountant fees and services
861
952
Note 9 – Tax on Profit/Loss for the Year and Deferred Tax
Group
Parent
(EUR’000)
2023
2022
2023
2022
Tax on profit/(loss) for the year:
Current tax (expense)/income
(5,377
)
(3,723
)
40
229
Current tax, adjustments to prior years
3,904
(1,654
)
(43
)
(51
)
Deferred tax, movement for the year
(1,044
)
—
—
—
Deferred tax, adjustments to prior years
(4,786
)
—
—
—
(7,303
)
(5,377
)
(3
)
178
Tax for the year can be explained as follows:
Profit/(loss) before tax
(474,144
)
(577,817
)
39,719
(143,079
)
Tax at the Danish corporation tax rate of 22%
104,312
127,120
(8,738
)
31,477
Tax effect of:
Non-deductible costs
(8,494
)
(17,094
)
(10,644
)
(14,242
)
Additional tax deductions
9,077
13,720
348
3,808
Impact from associate
(4,047
)
(3,893
)
—
—
Prior year adjustments
(1,294
)
—
—
—
Other effects including effect of different tax rates
(882
)
(2,716
)
(43
)
(51
)
Deferred tax asset, not recognized
(105,975
)
(122,514
)
19,074
(20,814
)
Tax on profit/(loss) for the year
(7,303
)
(5,377
)
(3
)
178
Effective tax rate
1.54
%
0.93
%
(0.01
)%
(0.12
)%
Group
Parent
(EUR’000)
2023
2022
2023
2022
Specification of Deferred Tax Assets/(Liabilities)
Tax deductible losses
521,697
433,174
102,921
116,153
Other temporary differences, assets
16,256
19,961
3,522
1,010
Deferred tax asset, not recognized
(537,953
)
(453,135
)
(98,635
)
(117,163
)
Other temporary differences, liabilities
(5,830
)
—
(7,808
)
—
Total Deferred Tax Assets/(Liabilities) at December, 31
(5,830
)
—
—
—
During 2023 a deferred tax liability has been recognised in relation to taxable temporary differences in one
jurisdiction, as we do not believe we will have any deductible temporary differences nor tax losses to deduct
the taxable difference in, when they are expected to reverse.
Deferred tax assets have not been recognized in the statements of financial position as of 31 December 2023
due to uncertainty relating to future utilization. The deferred tax asset can be carried forward without timing
limitations. For parent the deferred tax liabilities can be offset in deferred tax assets within the Danish joint
taxation group.
The Company had tax losses carried forward of €2,371.3 million (Parent Company: €467.8 million) and
€1,985.0 million (Parent Company: €528.0 million) at December 31, 2023 and December 31, 2022,
respectively. Tax losses can be carried forward infinitely, where certain limitations exist for amounts to be
utilized each year. Under Danish tax legislation, tax losses may be partly refunded by the tax authorities to the
extent such tax losses arise from research and development activities. For the year ended December 31,
2023, the jointly taxed Danish entities had a negative taxable income, and accordingly were entitled to a tax
refund of approximately €0.7 million for each of the years ended December 31, 2023 and 2022, respectively.
The Company is entitled to additional tax deductions related to share based payments (Warrants and RSU).
Tax deductions can be taken when the warrants/RSUs are exercised. For the year ended December 31, 2023,
the Company was entitled to additional tax deductions with a tax value of €10.6 million, (Parent company:€3.4
Financial Statements
65
million) compared to €5.2 million (Parent company: €2.6 million) for the year ended December 31, 2022. These
future tax deductions depend on the timing and amounts of warrant exercises, and accordingly, future
additional tax deductions are subject to uncertainties. Refer to Note 7 “Share-based Payment”, regarding a
description of warrant programs.
The parent company Ascendis Pharma A/S is jointly taxed with its Danish subsidiaries. The current Danish
corporation tax is allocated between the jointly taxed Danish companies in proportion to their taxable income
(full absorption with refunds for tax losses). These companies are taxed under the on-account tax scheme.
Note 10 – Intangible Assets
Group
(EUR’000)
Goodwill
Software
Total
Cost
January 1, 2022
3,495
2,222
5,717
December 31, 2022
3,495
2,222
5,717
Additions
—
53
53
Transferred
—
21
21
December 31, 2023
3,495
2,296
5,791
Amortization and impairment
January 1, 2022
—
(445
)
(445
)
Amortization charge
—
(444
)
(444
)
December 31, 2022
—
(889
)
(889
)
Amortization charge
—
(483
)
(483
)
December 31, 2023
—
(1,372
)
(1,372
)
Carrying amount
December 31, 2022
3,495
1,333
4,828
December 31, 2023
3,495
924
4,419
Parent
(EUR’000)
Software
Acquired
intellectual
property
Total
Cost
January 1, 2022
2,222
1,326
3,548
Additions
—
—
—
December 31, 2022
2,222
1,326
3,548
Additions
—
—
—
December 31, 2023
2,222
1,326
3,548
Amortization and impairment
January 1, 2022
(445
)
(1,326
)
(1,771
)
Amortization charge
(444
)
—
(444
)
December 31, 2022
(889
)
(1,326
)
(2,215
)
Amortization charge
(444
)
—
(444
)
December 31, 2023
(1,333
)
(1,326
)
(2,659
)
Carrying amount
December 31, 2022
1,333
—
1,333
December 31, 2023
889
—
889
At the reporting date, no internally generated intangible assets from development of pharmaceutical drug
candidates have been recognized. Thus, all related research and development costs incurred for the years
ended December 31, 2023, and 2022, were recognized in the statements of profit or loss.
Goodwill relates to the acquisition of Complex Biosystems GmbH (now Ascendis Pharma GmbH) in 2007.
Goodwill was calculated as the excess amount of the purchase price to the fair value of identifiable assets
acquired, and liabilities assumed at the acquisition date. Ascendis Pharma GmbH was initially a separate
technology platform company but is now an integral part of the Company’s research and development
activities. Accordingly, it is not possible to look separately at Ascendis Pharma GmbH when considering the
Financial Statements
66
recoverable amount of the goodwill. Goodwill is monitored and tested for impairment on a consolidated level
as the Company is considered to represent one cash-generating unit.
The recoverable amount of the cash-generating unit is determined based on an estimation of the Company’s
fair value less costs of disposal. The fair value of goodwill has been determined after taking into account the
market value of the Company’s ADSs as of the reporting date. The computation of the market value including
an estimation of selling costs, significantly exceeded the carrying amount of the net assets, leaving sufficient
value to cover the carrying amount of goodwill. Considering the excess value, no further assumptions are
deemed relevant to be applied in determining whether goodwill is impaired.
Note 11 – Property, Plant and Equipment
Group
(EUR’000)
Plant and
Machinery
Other
Equipment
Leasehold
Improve-
ments
Right-of-
Use Assets
Total
Cost
January 1, 2022
16,946
8,822
18,067
116,135
159,970
Additions
7,787
2,487
1,284
3,245
14,803
Disposals
(32
)
(395
)
—
(5,480
)
(5,907
)
Foreign exchange translation
243
289
779
5,566
6,877
December 31, 2022
24,944
11,203
20,130
119,466
175,743
Additions
2,580
503
228
7,547
10,858
Disposals
(383
)
(57
)
—
—
(440
)
Transferred
504
(21
)
(504
)
—
(21
)
Foreign exchange translation
(209
)
(208
)
(479
)
(3,093
)
(3,989
)
December 31, 2023
27,436
11,420
19,375
123,920
182,151
Depreciation and impairment
January 1, 2022
(5,527
)
(3,547
)
(2,488
)
(22,359
)
(33,921
)
Depreciation charge
(2,039
)
(1,793
)
(1,942
)
(11,740
)
(17,514
)
Disposals
25
380
—
5,480
5,885
Foreign exchange translation
(43
)
(63
)
(67
)
(925
)
(1,098
)
December 31, 2022
(7,584
)
(5,023
)
(4,497
)
(29,544
)
(46,648
)
Deprecation charge
(2,569
)
(1,899
)
(2,085
)
(11,875
)
(18,428
)
Impairment charge
(2,869
)
(405
)
(4,560
)
—
(7,834
)
Disposals
146
54
—
—
200
Foreign exchange translation
92
98
196
807
1,193
December 31, 2023
(12,784
)
(7,175
)
(10,946
)
(40,612
)
(71,517
)
Carrying amount:
December 31, 2022
17,360
6,180
15,633
89,922
129,095
December 31, 2023
14,652
4,245
8,429
83,308
110,634
The Impairment charge for the year ended December 31, 2023 relates to change in planned activities at one
of our R&D sites and is determined according to its estimated value in use.
Depreciation charges are specified below:
Group
(EUR’000)
2023
2022
Depreciation charges
Cost of sales
2,509
1,245
Research and development costs
10,296
10,892
Selling, general and administrative expenses
5,623
5,377
Total depreciation charges
18,428
17,514
Financial Statements
67
Parent
(EUR’000)
Plant and
Machinery
Other
Equipment
Leasehold
Improve-
ments
Right-of-
Use Assets
Total
Cost
January 1, 2022
2,926
2,392
2,911
23,725
31,954
Additions
3,613
210
80
852
4,755
Disposals
—
(8
)
—
—
(8
)
December 31, 2022
6,539
2,594
2,991
24,577
36,701
Additions
1,191
-
39
6,107
7,337
December 31, 2023
7,730
2,594
3,030
30,684
44,038
Depreciation and impairment
January 1, 2022
(52
)
(1,450
)
(146
)
(6,210
)
(7,858
)
Depreciation charge
(216
)
(403
)
(293
)
(2,595
)
(3,507
)
Disposals
—
8
—
—
8
December 31, 2022
(268
)
(1,845
)
(439
)
(8,805
)
(11,357
)
Deprecation charge
(370
)
(314
)
(288
)
(3,295
)
(4,267
)
December 31, 2023
(638
)
(2,159
)
(727
)
(12,100
)
(15,624
)
Carrying amount
December 31, 2022
6,271
749
2,552
15,772
25,344
December 31, 2023
7,092
435
2,303
18,584
28,414
Depreciation charges are specified below:
Parent
(EUR’000)
2023
2022
Depreciation charges
Cost of sales
2,509
1,245
Research and development costs
1,128
1,700
Selling, general and administrative expenses
630
562
Total depreciation charges
4,267
3,507
Note 12 – Investment in Associates
VISEN is a private Company with business activities within development, manufacturing and
commercialization of endocrinology rare disease therapies in Greater China. The Company’s interest in VISEN
is accounted for as an associate using the equity method in the consolidated financial statements as the
Company has determined that it has significant influence but not joint control.
The Company has granted VISEN exclusive rights to develop and commercialize TransCon hGH, TransCon
PTH and TransCon CNP in Greater China, and as consideration for the granting of such rights has received a
50% ownership of VISEN’s issued and outstanding shares. On January 8, 2021, the Company entered into an
equity investment of $12.5 million as part of VISEN’s $150 million Series B financing. Following VISEN’s Series
B financing, the Company retained 43.93% of VISEN’s issued and outstanding shares. As a result, a non-cash
gain of €42.3 million was recognized in the consolidated statement of profit or loss as part of share of
profit/(loss) of associate in 2021. The Series B financing did not change the accounting treatment of VISEN.
Financial Statements
68
The following table illustrates the summarized relevant financial information of VISEN:
VISEN Pharmaceuticals
Principal place of business:
China
Group
(EUR’000)
2023
2022
Statement of profit or loss
Profit/(loss) for the year from continuing operations
(41,873
)
(40,283
)
Total comprehensive income
(41,859
)
(40,273
)
Statement of financial position
Non-current assets
9,596
21,410
Current assets
48,041
92,204
Total assets
57,637
113,614
Equity
51,078
100,062
Non-current liabilities
140
180
Current liabilities
6,419
13,372
Total equity and liabilities
57,637
113,614
Company’s share of equity before eliminations
22,439
43,957
Elimination of internal profit and other equity method adjustments
(16,752
)
(21,025
)
Company’s share of equity
5,686
22,932
Investment in associate at December 31
5,686
22,932
Present ownership at December 31
43.93
%
43.93
%
Transactions and outstanding balances as of December 31
Invoicing of goods and services to associates
15,026
22,327
Total receivables from associates
991
3,554
Contract liabilities
7,133
14,213
Note 13 – Inventories
Group
Parent
(EUR’000)
2023
2022
2023
2022
Inventories
Raw materials and consumables
18,566
9,616
18,566
9,616
Work In progress
171,030
112,885
171,030
112,885
Finished goods
19,335
8,172
19,335
8,172
Total inventories
208,931
130,673
208,931
130,673
Due to production lead time, work in progress includes inventories that are not sellable before more than twelve
months after the reporting date.
At December 31, 2023, inventories were reduced with write-downs of €22.9 million, which include write-downs
on pre-launch inventories.
Note 14 – Contract Liabilities
At December 31, 2023, contract liabilities comprise unsatisfied performance obligations relating to delivery of
clinical and commercial supply under one of the Company’s license agreements. Non-current contract liabilities
are expected to be recognized as revenue within 1-3 years.
Revenue recognized from contract liabilities was €13.3 million (Parent Company: €— million) and €10.5 million
(Parent Company: €3.2 million) for the years ended December 31, 2023 and 2022, respectively, and related
to feasibility studies, and research and development services under the Company’s license agreements.
Financial Statements
69
Note 15 Provisions
Development in provisions is specified below:
2023
(EUR’000)
Provisions
At January 1
7,339
Net additions
28,293
Reversals and other adjustments
(1,904
)
Foreign exchange translation
(1,009
)
At December 31
32,719
Note 16 – Financial Assets and Liabilities
Financial assets and liabilities comprise following:
Group
Parent
(EUR’000)
2023
2022
2023
2022
Financial assets by category
Trade receivables
35,874
11,910
—
281
Receivables from group enterprises
—
—
1,759,806
1,372,347
Other receivables (excluding income tax and indirect tax
receivables)
3,909
3,884
3,111
3,139
Marketable securities
7,275
298,180
7,275
298,180
Cash and cash equivalents
392,164
444,767
263,909
407,184
Financial assets measured at amortized costs
439,222
758,741
2,034,101
2,081,131
Total financial assets
439,222
758,741
2,034,101
2,081,131
Classified in the statement of financial position
Non-current assets
2,127
9,412
1,761,231
1,381,142
Current assets
437,095
749,329
272,870
699,989
Total financial assets
439,222
758,741
2,034,101
2,081,131
Financial liabilities by category
Borrowings
Convertible senior notes
407,095
399,186
407,095
399,186
Royalty funding liabilities
138,377
—
—
—
Lease liabilities
98,793
109,191
15,187
16,312
Trade payables and accrued expenses
94,566
101,032
85,784
95,174
Payables to group enterprises
—
—
—
6,558
Financial liabilities measured at amortized costs
738,831
609,409
508,066
517,230
Derivative liabilities
143,296
157,950
143,296
157,950
Financial liabilities measured at measured at fair value
through profit or loss
143,296
157,950
143,296
157,950
Total financial liabilities
882,127
767,359
651,362
675,180
Classified in the statement of financial position
Non-current liabilities
762,161
640,907
551,176
558,868
Current liabilities
119,966
126,452
100,186
116,312
Total financial liabilities
882,127
767,359
651,362
675,180
Finance income and expenses are specified below:
Financial Statements
70
Group
Parent
(EUR’000)
2023
2022
2023
2022
Finance income
Interest income
16,857
7,426
15,096
7,103
Interest income from group enterprises
—
—
37,313
28,518
Fair value gains, derivatives
14,654
—
14,654
—
Foreign exchange and other adjustments gain (net)
12,346
44,755
10,561
46,617
Total finance income
43,857
52,181
77,624
82,238
Finance expenses
Interest expense
44,065
30,682
34,714
27,256
Interest expenses to group enterprises
—
—
—
308
Fair value loss, derivatives
—
15,483
—
15,483
Foreign exchange and other adjustments loss (net)
—
4,322
—
4,322
Total finance expenses
44,065
50,487
34,714
47,369
Interest income and interest expenses relate to financial assets and liabilities measured at amortized cost. Net
exchange rate gains and losses primarily relate to U.S. Dollar/Euro fluctuations pertaining to the Company’s
cash, cash equivalents, marketable securities and borrowings.
Financial Statements
71
Borrowings
Convertible Senior Notes
In March 2022, the Company issued an aggregate principal amount of $575.0 million of fixed rate 2.25%
convertible notes. The net proceeds from the offering of the convertible notes were $557.9 million (€503.3
million), after deducting the initial purchasers’ discounts and commissions, and offering expenses. The
convertible notes rank equally in right of payment with all future senior unsecured indebtedness. Unless earlier
converted or redeemed, the convertible notes will mature on April 1, 2028.
The convertible notes accrue interest at a rate of 2.25% per annum, payable semi-annually in arrears on April
1 and October 1 of each year, beginning on October 1, 2022. At any time before the close of business on the
second scheduled trading day immediately before the maturity date, noteholders may convert their convertible
notes at their option into the Company’s ordinary shares represented by ADSs, together, if applicable, with
cash in lieu of any fractional ADS, at the then-applicable conversion rate. The initial conversion rate is 6.0118
ADSs per $1,000 principal amount of convertible notes, which represents an initial conversion price of $166.34
per ADS. The conversion rate and conversion price will be subject to customary adjustments upon the
occurrence of certain events.
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 April 7, 2025, but only if the last reported sale
price per ADS exceeds 130% of the conversion price on each of (i) at least 20 trading days, whether or not
consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately
before the date the Company sends the related optional redemption notice; and (ii) the trading day immediately
before the date the Company sends such notice.
Royalty Funding Liabilities
In September 2023, the Company entered into a $150.0 million capped synthetic royalty funding agreement
(the “Royalty Pharma Agreement”) with Royalty Pharma Development, LLC (“Royalty Pharma”). The net
proceeds were $146.3 million (€136.3 million) after deducting offering expenses.
Under the terms of the Royalty Pharma Agreement, the Company received an upfront payment of $150.0
million (the “Purchase Price”), in exchange for which Royalty Pharma obtained the right to receive payment of
9.15% of U.S. net sales of SKYTROFA, beginning on January 1, 2025 (the “Revenue Interest Payments”). The
Revenue Interest Payments to Royalty Pharma will cease upon reaching a multiple of 1.925 times the
Purchase Price, or 1.65 times the Purchase Price if Royalty Pharma receives Revenue Interest Payments in
that amount by December 31, 2031.
The Royalty Pharma Agreement includes a buy-out option, which provides the Company with the right to settle
all outstanding liabilities at any time by paying a buy-out amount equal to 1.925 times the Purchase Price
minus the Revenue Interest Payments paid to Royalty Pharma as of the effective date of the buy-out notice.
However, if the buy-out notice is provided on or prior to December 31, 2028, and the Company has paid the
Purchaser Revenue Interest Payments equal to the Purchase Price as of the date of the buy-out notice, then
the buy-out amount equal to 1.65 times the Purchase Price minus the Revenue Interest Payments paid to
Royalty Pharma as of the effective date of the buy-out notice.
On December 31, 2023 the carrying amount of the royalty funding liabilities was €138.4 million, and the fair
value was approximately €144.0 million. Fair value cannot be measured based on quoted prices in active
markets or other observable input, and accordingly the fair value was measured by using an estimated market
rate for an equivalent instrument.
Leases
The Company primarily leases office and laboratory facilities. Lease arrangements contain a range of different
terms and conditions and are typically entered into for fixed periods. In order to improve flexibility to the
Company’s operations, lease arrangements may provide the Company with option to extend the lease or
terminate the lease within the enforceable lease term. In the Company’s current lease portfolio, extension and
termination options range between six months to five years, in addition to the non-cancellable periods.
Financial Statements
72
The following expenses relating to lease activities are recognized in the statements of profit or loss:
Group
Parent
(EUR’000)
2023
2022
2023
2022
Lease expense
Depreciations
11,875
11,740
3,295
2,595
Expenses relating to short term leases and leases of low
value assets
353
280
164
149
Lease interest
3,581
3,842
425
452
Total lease expense
15,809
15,862
3,884
3,196
In February 2022, the Company entered into a facility lease in Germany with an enforceable lease term of 15
years, which is expected to commence in 2025 and comprises total lease cash-outflow of €68.1 million.
Financing Activities
Development in borrowings related to financing activities is specified below:
Group
Cash payments
Non-cash items
(EUR’000)
Beginning
of period
Repayments
Proceeds
Additions/
(disposals)
Separation
of fair
value
Accretion
of
interest
Foreign
exchange
adjustments and
remeasurements
End
of period
Financing
activities
December 31,
2023
Borrowings
399,186
(12,054
)
136,256
—
—
40,386
(18,302
)
545,472
Leasing
109,191
(14,006
)
—
2,973
—
3,581
(2,946
)
98,793
Total financing
activities
508,377
(26,060
)
136,256
2,973
—
43,967
(21,248
)
644,265
Financing
activities
December 31,
2022
Borrowings
—
(6,710
)
503,281
—
(142,467
)
30,216
14,866
399,186
Leasing
104,961
(7,995
)
—
3,194
—
3,842
5,189
109,191
Total financing
activities
104,961
(14,705
)
503,281
3,194
(142,467
)
34,058
20,055
508,377
Financial Statements
73
Parent
Cash payments
Non-cash items
(EUR’000)
Beginning
of period
Repayments
Proceeds
Additions/
(disposals)
Separation
of fair
value
Accretion
of
interest
Foreign
exchange
adjustments and
remeasurements
End
of period
Financing
activities
December 31,
2023
Borrowings
399,186
(12,054
)
—
—
—
34,227
(14,264
)
407,095
Leasing
16,312
(3,085
)
—
1,535
—
425
—
15,187
Total financing
activities
415,498
(15,139
)
—
1,535
—
34,652
(14,264
)
422,282
Financing
activities
December 31,
2022
Borrowings
—
(6,710
)
503,281
—
(142,467
)
30,216
14,866
399,186
Leasing
17,915
(2,908
)
—
853
—
452
—
16,312
Total financing
activities
17,915
(9,618
)
503,281
853
(142,467
)
30,668
14,866
415,498
For December 31, 2022, "separation of fair value" on convertible senior notes relates to derivative liabilities
that is separated from convertible senior notes and presented separately in the statement of financial
position, please refer to following section, “Derivative Liabilities”.
Derivative Liabilities
Derivative liabilities relate to the foreign currency conversion option embedded in the convertible notes. Fair
value of derivative liabilities 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
(Level 3 in the fair value hierarchy). The fair value of the options is calculated, applying the following
assumptions: (1) conversion price; (2) own share price; (3) maturity of the options; (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
options; (5) no payment of dividends; and (6) an expected volatility using the Company’s own share price
(50.47% as of December 31, 2023 and 49.24% as of December 31, 2022).
Sensitivity Analysis
On December 31, 2023, all other inputs and assumptions held constant, a 10% increase in volatility, will
increase the fair value of derivative liabilities by approximately €14.8 million and indicates a decrease in profit
or loss and equity before tax. Similarly, a 10% decrease in volatility indicates the opposite impact.
Similarly, on December 31, 2023, all other inputs and assumptions held constant, a 10% increase in the share
price, will increase the fair value of derivative liabilities by approximately €26.7 million and indicates a decrease
in profit or loss and equity before tax. Similarly, a 10% decrease in the share price indicates the opposite
impact.
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 carrying amount. Fair value of marketable securities, convertible notes and derivatives and
their level in the fair value hierarchy is summarized in following table, where
Financial Statements
74
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.
Group
2023
2022
(EUR’000)
Carring
Amount
Fair Value
Carring
Amount
Fair Value
Fair Value
Level
Financial assets
(1-3)
Marketable securities
7,275
7,266
298,180
295,843
1
Financial assets measured at cost
7,275
7,266
298,180
295,843
Financial liabilities
Borrowings
Convertible Senior Notes
407,095
385,410
399,186
382,459
3
Royalty funding liabilities
138,377
143,975
—
—
3
Financial liabilities measured at cost
545,472
529,385
399,186
382,459
Derivative liabilities
143,296
143,296
157,950
157,950
3
Financial liabilities measured at fair value through
profit and loss
143,296
143,296
157,950
157,950
Parent
2023
2022
(EUR’000)
Carring
Amount
Fair Value
Carring
Amount
Fair Value
Fair Value
Level
Financial assets
(1-3)
Marketable securities
7,275
7,266
298,180
295,843
1
Financial assets measured at cost
7,275
7,266
298,180
295,843
Financial liabilities
Borrowings
Convertible Senior Notes
407,095
385,410
399,186
382,459
3
Financial liabilities measured at cost
407,095
385,410
399,186
382,459
Derivative liabilities
143,296
143,296
157,950
157,950
3
Financial liabilities measured at fair value through
profit and loss
143,296
143,296
157,950
157,950
Development in level 3 fair value remeasurements are specified below:
Group and Parent
(EUR’000)
2023
2022
Derivative liabilities
January 1
157,950
—
Additions
—
142,467
Remeasurement recognized in financial income or expense
(14,654
)
15,483
December 31
143,296
157,950
Note 17 – Financial Risk Management
The Company manages capital to ensure that all group enterprises will be able to continue as going concern
while maximizing the return to shareholders through the optimization of debt and equity balances.
Financial Statements
75
Capital Structure
The Company’s capital structure consists of equity and external debt obtained through issuance of convertible
notes and royalty funding liabilities. The Company is not subject to any contractually imposed capital
requirements or financial covenants. The capital structure is reviewed on an ongoing basis for the adequacy
of the Company’s capital compared to the resources required for carrying out ordinary activities.
Development in the Company’s share capital and treasury shares reserves are described in the following
sections. Other equity reserves are described in Note 2 “Summary of Significant Accounting Policies”.
Share Capital
The share capital of Ascendis Pharma A/S consists of 57,707,439 fully paid shares at a nominal value of DKK
1, all in the same share class.
The number of shares of Ascendis Pharma A/S are as follows:
(EUR’000)
2023
2022
2021
2020
2019
Changes in share capital
Beginning of year
57,152,295
56,937,682
53,750,386
47,985,837
42,135,448
Increase through cash
contribution
555,144
214,613
3,187,296
5,764,549
5,850,389
End of year
57,707,439
57,152,295
56,937,682
53,750,386
47,985,837
Treasury Shares Reserve
The holding of treasury shares are as follows:
Nominal
value
Holding
Holding in
% of total
outstanding
shares
Treasury shares
(EUR’000)
(Number)
January 1, 2022
21
154,837
Acquired from third-parties
134
1,000,000
Transferred under stock incentive programs
(6
)
(41,685
)
December 31, 2022
149
1,113,152
2.0
%
Transferred under stock incentive programs
(3
)
(20,098
)
December 31, 2023
146
1,093,054
1.9
%
Financial Risk Management Objectives
The Company regularly monitors the access to domestic and international financial markets, manages the
financial risks relating to its operations, and analyzes exposures to risk, including market risk, such as foreign
currency risk and interest rate risk, credit risk and liquidity risk.
The Company’s financial risk exposure and risk management policies are described in following sections.
Market Risk
The Company’s activities expose the group enterprises to the financial risks of changes in foreign currency
exchange rates and interest rates. Derivative financial instruments are not applied to manage exposure to
such risks.
Foreign Currency Risk Management
The Company is exposed to foreign currency exchange risks arising from various currency exposures,
primarily with respect to the U.S. Dollar (“USD”).
Financial Statements
76
Foreign currency exchange risks are unchanged to prior year, and primarily relate to sale and purchases in
foreign currencies, and cash, cash equivalents and marketable securities, countered by convertible notes and
royalty funding liabilities. The exposure from foreign currency exchange risks is managed by maintaining cash
positions in the currencies in which the majority of future expenses are denominated, and payments are made
from those reserves.
Foreign Currency Sensitivity Analysis
The following table details how a strengthening of the USD against the EUR would impact profit and loss, and
equity before tax at the reporting date. A similar weakening of the USD would have the opposite effect with
similar amounts. A positive number indicates an increase in profit or loss and equity before tax, while a negative
number indicates the opposite. The sensitivity analysis is deemed representative of the inherent foreign
currency exchange risk associated with the operations.
Group
Hypothetical impact on consolidated
financial statements
(EUR’000)
Nominal
position
Increase
in foreign
exchange
rate
Profit or
loss before
tax
Equity
before tax
USD/EUR
December 31, 2023
(369,091
)
10
%
(36,909
)
(36,909
)
December 31, 2022
60,581
10
%
6,058
6,058
Parent
Hypothetical impact on separate financial
statements
(EUR’000)
Nominal
position
Increase
in foreign
exchange
rate
Profit or
loss before
tax
Equity
before tax
USD/EUR
December 31, 2023
(403,063
)
10
%
(40,306
)
(40,306
)
December 31, 2022
119,279
10
%
11,928
11,928
Interest Rate Risk Management
Outstanding convertible notes comprise a 2.25% coupon fixed rate structure. Further, interest rate on lease
liabilities is fixed at the lease commencement date. In addition, the effective interest rate on royalty funding
liabilities is estimated at initial recognition and takes into account anticipated amount and timing of future cash
flows, which further depends on future commercial revenue forecasts and the probability of exercising the
embedded buy-out option. Material changes to anticipated future cash flows could potentially increase or
decrease future interest expense.
Future indebtedness 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.
Rate structure of marketable securities are specified below:
Group and Parent
December 31, 2023
December 31, 2022
Carrying
amount
Fair value
Carrying
amount
Fair value
(EUR’000)
Marketable securities specified by rate structure
Fixed rate
7,275
7,266
205,825
203,543
Floating rate
—
—
11,787
11,773
Zero-coupon
—
—
80,568
80,527
Total marketable securities
7,275
7,266
298,180
295,843
Financial Statements
77
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. The effects of interest rate fluctuations are not considered a material risk to the Company’s
financial position. Accordingly, no interest sensitivity analysis has been presented.
Credit Risk Management
The Company has adopted an investment policy with the primary purpose of preserving capital, fulfilling
liquidity needs and diversifying the risks associated with cash, cash equivalents and marketable securities.
This investment policy establishes minimum ratings for institutions with which the Company holds cash, cash
equivalents and marketable securities, as well as rating and concentration limits for marketable securities held.
The exposure to credit risk primarily relates to cash, cash equivalents, and marketable securities. The credit
risk on bank deposits is limited because the counterparties, holding significant deposits, are banks with
minimum credit-ratings of A3/A- assigned by international credit-rating agencies. 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. government bonds, treasury bills, corporate bonds, and agency bonds. The
Company’s investment policy, approved by the Board of Directors, 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, the risk of expected credit loss
on bank deposits and marketable securities, including the hypothetical impact arising from the probability of
default 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.
Marketable securities specified by investment grade credit rating are specified below:
Group and Parent
December 31, 2023
December 31, 2022
Carrying
amount
Fair value
Carrying
amount
Fair value
(EUR’000)
Marketable securities specified by investment grade
credit rating
High grade
4,523
4,519
203,530
202,048
Upper medium grade
2,752
2,747
94,650
93,795
Total marketable securities
7,275
7,266
298,180
295,843
At the reporting dates, there are no significant overdue trade receivable balances. As a result, write-down to
accommodate expected credit-losses is not deemed material.
Liquidity Risk Management
Historically, the risk of insufficient funds has been addressed through proceeds from sale of the Company’s
securities in private and public offerings, through issuance of convertible notes in 2022, and through royalty
funding liabilities in 2023.
Liquidity risk is managed by maintaining adequate cash reserves and banking facilities, and by matching the
maturity profiles of marketable securities with cash-forecasts. The risk of shortage of funds is monitored, using
a liquidity planning tool, to ensure sufficient funds are available to settle liabilities as they fall due.
Financial Statements
78
Besides marketable securities and deposits, the Company’s financial assets are recoverable within twelve
months after the reporting date. The composition of the marketable securities portfolio and its fair values are
specified in the following table.
Group and Parent
December 31, 2023
December 31, 2022
Carrying
amount
Fair value
Carrying
amount
Fair value
(EUR’000)
Marketable securities specified by security type
U.S. Treasury bills
—
—
79,086
79,043
U.S. Government Bonds
4,523
4,519
99,337
98,075
Corporate bonds
2,752
2,747
104,236
103,301
Agency bonds
—
—
15,521
15,424
Total marketable securities
7,275
7,266
298,180
295,843
Classified based on maturity profiles
Non-current assets
—
—
7,492
7,201
Current assets
7,275
7,266
290,688
288,642
Total marketable securities
7,275
7,266
298,180
295,843
Marketable securities have a weighted average duration of 1.0 month after the reporting date.
Maturity Analysis
Contractual cashflows for non-derivative financial liabilities recognized in the statements of financial position
are specified below:
Group
(EUR’000)
<1 year
1-5 years
>5 years
Total
contractual
cashflows
Carrying
amount
December 31, 2023
Borrowings
11,708
742,925
42,397
797,030
545,472
Lease liabilities
14,385
51,426
49,056
114,867
98,793
Trade payables and accrued expenses
94,566
—
—
94,566
94,566
Total financial liabilities
120,659
794,351
91,453
1,006,463
738,831
Group
(EUR’000)
<1 year
1-5 years
>5 years
Total
contractual
cashflows
Carrying
amount
December 31, 2022
Borrowings
12,130
48,519
545,161
605,810
399,186
Lease liabilities
13,996
53,821
60,946
128,763
109,191
Trade payables and accrued expenses
101,032
—
—
101,032
101,032
Total financial liabilities
127,158
102,340
606,107
835,605
609,409
Parent
(EUR’000)
<1 year
1-5 years
>5 years
Total
contractual
cashflows
Carrying
amount
December 31, 2023
Borrowings
11,708
561,340
—
573,048
407,095
Lease liabilities
3,206
8,607
4,905
16,718
15,187
Trade payables and accrued expenses
85,784
—
—
85,784
85,784
Total financial liabilities
100,698
569,947
4,905
675,550
508,066
Financial Statements
79
Parent
(EUR’000)
<1 year
1-5 years
>5 years
Total
contractual
cashflows
Carrying
amount
December 31, 2022
Borrowings
12,130
48,519
545,161
605,810
399,186
Lease liabilities
2,978
9,811
5,260
18,049
16,312
Payables to group enterprises
6,558
—
—
6,558
6,558
Trade payables and accrued expenses
95,174
—
—
95,174
95,174
Total financial liabilities
116,840
58,330
550,421
725,591
517,230
Note 18 – Commitments and Contingencies
Contractual commitments for the acquisition of property, plant and equipment were €1.2 million and €4.4 million
for the years ended December 31, 2023 and 2022, respectively. Further, with certain suppliers, the Company
has agreed minimum commitments related to the manufacturing of product supply, subject to continuous
negotiation and adjustments according to the individual contractual terms and conditions. Cost of product
supply is recognized when the Company obtains control of the goods. In addition, the Company has
commitments related to short-term leases and leases of low value assets, contracts of various lengths in
respect of research and development with CROs, and IT and facility related services. Costs relating to those
commitments are recognized as services are received.
The Company is not aware of any significant legal claims or disputes.
The Parent company is jointly registered for VAT purposes with its Danish subsidiaries and is jointly liable for
the payment thereof.
Letter of Support – Parent Company
The Parent Company has provided letters of support to its five wholly-owned subsidiaries Ascendis Pharma
Ophthalmology Division A/S, Ascendis Pharma Endocrinology Division A/S, Ascendis Pharma Bone Diseases
A/S, Ascendis Pharma Growth Disorders A/S and Ascendis Pharma Oncology Division A/S.
At December 31, 2023, Ascendis Pharma Ophthalmology Division A/S, Ascendis Pharma Endocrinology
Division A/S, Ascendis Pharma Bone Diseases A/S, Ascendis Pharma Growth Disorders A/S and Ascendis
Pharma Oncology Division A/S reported negative net assets of €37.8 million, €775.7 million, €368.1 million,
€322.0 million and €285.1 million, respectively. To support the five companies, the Parent Company has
confirmed the technical and financial support that it has committed and further will commit for the period until
June 30, 2025.
Ascendis Pharma A/S undertakes to make all reasonable technical efforts to support the companies to conduct
all pre-clinical, manufacturing, clinical and regulatory activities with their product candidates for the period. In
addition, Ascendis Pharma A/S undertakes to provide the companies with the necessary funds to ensure that
the companies can conduct their activities for the period in compliance with Danish company regulation and
to ensure that the companies can meet their financial obligations as they fall due during the period.
Applied Exception - Subsidiary
Ascendis Pharma Endocrinology Division A/S has prepared it´s statutory financial statements for 2023
pursuant to section 78(a) of the Danish Financial Statements Act, thereby reporting under the requirements
for enterprises of reporting class B instead of reporting class C.
Note 19 – Related Party Transactions
The Board of Directors, the Executive Board and non-executive Senior Management (“Key Management
Personnel”) are considered related parties as they have authority and responsibility for planning and directing
the Company’s operations. Related parties also include undertakings in which such individuals have a
Financial Statements
80
controlling or joint controlling interest. Additionally, all group enterprises and associates are considered related
parties.
Neither the Company’s related parties or major shareholders hold a controlling, joint controlling, or significant
interest in the Group.
The Company has entered into employment agreements with and issued warrants and RSUs and PSUs to
Key Management Personnel. In addition, the Company pays fees for board tenure and board committee tenure
to the independent members of the Board of Directors. For further details, refer to Note 6 “Employee Cost”.
Indemnification agreements have been entered with members of the Board of Directors, the Executive Board
and Non-executive Senior Management.
Transactions between the parent company and group enterprises comprise management and license fees,
research and development services, and clinical supplies and commercial supplies. These transactions have
been eliminated in the consolidated financial statements. Transactions and outstanding balances with the
associate are disclosed in Note 12 “Investment in Associate”.
In addition, the parent company Ascendis Pharma A/S is jointly taxed with its Danish subsidiaries, where the
current Danish corporation tax is allocated between the jointly taxed Danish companies. For further details,
refer to Note 9 “Tax on Profit/(Loss) for the Year and Deferred Tax”.
Except for the information disclosed above, the Company has not undertaken any significant transactions with
members of the Key Management Personnel, or undertakings in which the identified related parties have a
controlling or joint controlling interest.
Transactions with subsidiaries are specified below:
Parent
(EUR’000)
2023
2022
Rendering of services
243,002
92,626
Sale of products
54,710
9,562
Milestone payments
5,000
—
License income
—
2,633
Total revenue
302,712
104,821
Milestone payments (expenses)
(100
)
—
License expenses
(100
)
(100
)
Purchase of services
(56,161
)
(95,366
)
Total expenses
(56,361
)
(95,466
)
Interest income
37,313
28,518
Interest expenses
—
(308
)
Net financial income
37,313
28,210
Financial Statements
81
Note 20 – Investments in Group Enterprises
Ascendis Pharma A/S’s (parent company) investments in Group enterprises at December 31, 2023, comprise:
Subsidiaries
Domicile
Ownership
Ascendis Pharma GmbH
Germany
100%
Ascendis Pharma Endocrinology GmbH
Germany
100%
Ascendis Pharma, Inc.
USA
100%
Ascendis Pharma Endocrinology, Inc.
USA
100%
Ascendis Pharma Ophthalmology Division A/S
Denmark
100%
Ascendis Pharma Endocrinology Division A/S
Denmark
100%
Ascendis Pharma Bone Diseases A/S
Denmark
100%
Ascendis Pharma Growth Disorders A/S
Denmark
100%
Ascendis Pharma Oncology Division A/S
Denmark
100%
Ascendis Pharma Nordics A/S
Denmark
100%
Ascendis Pharma Europe A/S
Denmark
100%
Ascendis Pharma UK Limited
United Kingdom
100%
Ascendis Pharma Iberia S.L.
Spain
100%
Associate
Domicile
Ownership
VISEN Pharmaceuticals
Cayman Island
43.93%
Note 21 – Ownership
The following investors, or groups of affiliated investors, are known by us to beneficially own more than 5% of
the Company’s outstanding ordinary shares, at December 31, 2023:
• T. Rowe Price Associates, Inc., USA
• Entities affiliated with RA Capital Management, LLC, USA
• Entities affiliated with Artisan Partners Limited Partnership, USA
• Entities affiliated with FMR LLC, USA
• Entities affiliated with Wellington Management Group LLP, USA
• Entities affiliated with Janus Henderson Group plc, United Kingdom
• Avoro Capital Advisors LLC, USA
• Westfield Capital Management Company, L.P., USA
The Company’s American Depository Shares are held through BNY (Nominees) Limited as nominee, of The
Bank of New York Mellon, UK (as registered holder of the Company’s outstanding ADSs).
Note 22 – Subsequent Events
On January 29, 2024, the Company announced the formation and launch with Frazier Life Sciences of Eyconis,
Inc., a separate company created to develop, manufacture, and commercialize TransCon ophthalmology
assets globally, together with a $150 million commitment from an investor syndicate that includes Frazier, RA
Capital Management, venBio, and HealthQuest Capital.
The Company has granted Eyconis exclusive rights to develop and commercialize TransCon ophthalmology
products globally and received an equity position in the newly formed company. In addition, the Company will
be eligible to receive development, regulatory, and sales milestone payments, plus single digit royalties on
global net sales of commercialized products, if any. Eyconis will initially be based in Redwood City, California,
and certain employees of the Company are expected to join the newly formed company.
No other events have occurred after the reporting date that would influence the evaluation of these financial
statements.