What happened
Shares of the mid-cap biopharma Ascendis Pharma A/S (ASND 2.56%) are under heavy pressure today. Specifically, the drugmaker's stock was done by a hefty 34% as of 11:24 a.m. ET Monday morning.
What went wrong? Ahead of the opening bell, Ascendis announced that the Food and Drug Administration (FDA) has identified deficiencies in its New Drug Application (NDA) for the hypoparathyroidism candidate TransCon PTH (palopegteriparatide) that prevent the agency from holding further discussions about labeling and post-marketing requirements/commitments. Ascendis' management further noted that the specific deficiencies were not disclosed in the letter and that this notification does not reflect the FDA's final regulatory decision regarding TransCon PTH's NDA.
So what
What's the big deal? With a wide-open field, Wall Street analysts had sky-high expectations for TransCon PTH's commercial prospects as a treatment for hypoparathyroidism. In fact, the drug was forecast to haul in more than $1 billion in annual sales by mid-2025, according to multiple analysts.
Now, the good news is that this deficiency letter may ultimately translate into nothing more than a delay of a few months. It's hard to tell without further details. However, investors clearly aren't taking any chances in this risk-off environment.
Now what
Is Ascendis stock a bad-news buy? Hypoparathyroidism represents a high unmet medical need. As such, it'd be surprising if the FDA didn't work closely with Ascendis to resolve these outstanding deficiencies. Then again, it does depend on how serious these deficiencies turn out to be.
In the long term, though, Ascendis stands a decent chance of getting TransCon PTH over the finish line, based on the drug's strong clinical data in this setting. In turn, this beaten-down pharma stock might be worth buying if you're comfortable with risk.
