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Why Shares of Ascendis Soared This Week

By Jim Halley – Aug 26, 2021 at 9:46PM

Key Points

  • A key approval by the FDA drove Ascendis shares higher.
  • The company’s next step will be to market its first approved therapy, Skytrofa, to treat pediatric growth hormone deficiency.

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The pharmaceutical company saw its shares jump more than $26.

What happened

Shares of Ascendis Pharma (ASND 3.92%) climbed more than 25% this week, almost all of that on Thursday. The stock opened at $120.71 on Monday and it wasn't until Wednesday that it began to climb, rising to $123.67 at the close and shortly before it announced news from the Food and Drug Administration (FDA). On Thursday, Ascendis opened at $150.57 and rose as high as $158.78 during the day before closing at $149.70, still a jump of more than $26 from the day before.

A small child reacts in pain to an injection in their right arm.

Image source: Getty Images.

So what

The company chose the same day of its second-quarter earnings report to announce that the FDA had given approval to Skytrofa, a once-weekly injection of the growth hormone somatropin, to treat children with growth hormone deficiency (GHD). The earnings weren't anything to write home about as the company reported revenue of $1.18 million, down from $1.65 million, year over year. The company lost $158 million, compared to $111.6 million in the same period in 2020.

However, the real news was about the company's future, not its current finances. The big deal with Skytrofa's approval is it is the first approved once-weekly growth hormone injection; and according to Ascendis' study, it showed superior results to Genotropin, a drug sold by Pfizer that is given once daily. According to the two-year phase 3 study of 161 children, those who received Skytrofa grew almost one centimeter more in a year than those who received daily shots. There were also no serious side effects or dropouts in the study. A once-weekly injection could be a big edge with consumers since that means patients will only need to be injected 52 times a year instead of 365 times.

Now what

Ascendis will move quickly to bring its first approved drug to market. While pediatric growth deficiency is a rare disease, the drug could easily bring the biotech company as much as $500 million a year in sales, as Pfizer made $427 million last year from Genotropin.

Ascendis, in an investor report, said that the global human growth hormone market is estimated at $5 billion, including $1.3 billion in the United States and a GHD global pediatric market of $700 million.

The company's next hurdle for the drug will be getting approval for its use in Europe. Skytrofa will help fund the rest of the company's pipeline of therapies for endocrinology and oncology, so the jump in the stock seems warranted.

Jim Halley owns shares of Pfizer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Ascendis Pharma Stock Quote
Ascendis Pharma
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