Ascendis Pharma Q3 2026 Earnings Call Transcript

Ascendis Pharma (NASDAQ:ASND) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Ascendis Pharma reported Q3 2026 product revenue of 366 million euros, up 89% year-over-year, driven by strong demand for its three marketed products: YORVIPATH, Yorvel, and SKYTROFA.

Strategic initiatives include expanding indications for existing products, geographic commercial expansion, and developing new products using the TransCon technology platform.

The company aims to achieve over 5 billion euros in annual product revenue by 2030 and introduce new therapeutic areas, anticipating multiple new blockbuster products.

Operational highlights include a successful launch of Yorvel in the U.S., with positive opinions for EU expansion, and continuous growth in patient demand for YORVIPATH and SKYTROFA.

Management highlighted a strong focus on patient education campaigns and maintaining safety standards, particularly with regard to potential competitors entering the market.

Full Transcript

OPERATOR

Ladies and gentlemen, thank you for standing by. Welcome to the third quarter 2026 Ascendis Pharma earnings conference call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during the session, you would need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised, and to withdraw your question, please press star 11 again.

Please be advised that today’s conference is being recorded. I would like now to turn the conference over to Chad Fugier, Vice President, Investor Relations. Please go ahead.

Chad Fugiere (Vice President, Investor Relations)

Thank you, operator, and thank you everyone for joining our third quarter 2026 financial results conference call. I’m Chad Fugiere, Vice President, Investor Relations at Ascendis Pharma. Joining me on the call today are Yen Mickelson, President and Chief Executive Officer, Scott Smith, Chief Financial Officer, and Jay Wu, Executive Vice President and President, US Marketing. Before we begin, I would like to remind everyone that certain matters discussed on today’s conference call are forward-looking statements relating to future events, future financial performance, and management’s plans and objectives for the business. These statements are subject to risks and uncertainties and actual results could differ materially from those anticipated in the forward-looking statements. The risk factors that may affect results are described in our Annual Report on Form 20-F filed with the SEC on February 11, 2026, as such report may be updated by other public filings with the SEC from time to time.

The forward-looking statements made today are as of the date of this call and we do not undertake any obligation to update these forward-looking statements. The speakers on today’s call may also refer to certain non-IFRS financial measures. A reconciliation of these non-IFRS financial measures to the most directly comparable IFRS measures is available in our press release issued today. Content of this call is not intended to constitute and should not be interpreted as direct or indirect promotion of any of our products or product candidates. A copy of this press release may be obtained by visiting the Investor Relations page of our website at investors.ascendispharma.com.

With that, I’ll turn the call over to Yen.

Jan Mikkelsen (Chief Executive Officer)

Thanks, Chad. Good day, everyone. In the third quarter, execution across R&D and Commercial continued to drive the transformation of Ascendis Pharma into a leading global biopharma company, strengthening our ability to make a meaningful difference for patients. In Q3 we delivered product revenue of 366 million euro, up 89% over last year and up 51 million euro over last quarter, reflecting strong new patient demand across all three of our marketed products.

Looking ahead, we see three complementary drivers of durable growth. First, continued growth for our existing three products in already approved indications. Second, expansion of indications for our three existing products, including label extensions for monotherapy and combination therapy. Third, new products enabled by our TransCon technology platform to drive sustainable long-term growth. Importantly, our global geographic commercial expansion will further accelerate growth of all three drivers over the coming years as more and more countries will be fully commercial.

Our R&D and Commercial infrastructure gives us confidence that we can achieve our Vision 2030 goals of generating over 5 billion euro in annual product revenue in 2030 and develop multiple new blockbuster products with the TransCon technology platform, which also includes a new therapeutic area. Let us start with the first driver: continued growth for our existing three products, YORVIPATH, Yorvel, and SKYTROFA, in already approved indications. YORVIPATH is the first and only approved treatment for hypopara in adults and is now available commercially or through named-patient programs in more than 40 countries. Global YORVIPATH revenue in the third quarter was 291 million euro, up 103% over last year and up 39 million euro over last quarter.

In the U.S., new patient demand in the third quarter was consistent with prior quarters even during the summer months. With an estimated 70,000 to 90,000 adults that live with chronic hypopara in the U.S., more than 90% of the estimated number of patients are still potential candidates for YORVIPATH PTH replacement therapy. In September we launched a U.S. national disease awareness campaign designed to help patients identify symptoms and empower them to speak with their healthcare provider about treatment options.

We expect the campaign’s impact to build gradually over the coming quarters and are planning to launch additional awareness campaigns in 2027. Outside the U.S., revenue continued to grow quarter by quarter with full commercial availability for YORVIPATH in 13 countries and 15 additional markets expected in 2027. YORVIPATH’s robust uptake is supported by clinical data that show its ability to maintain normal serum calcium and phosphate, normalize urinary calcium and phosphate excretion, normalize active vitamin D production, achieve independence from conventional therapy, and improve quality of life, skeletal health, and kidney function.

To our knowledge, no therapy in development has shown this depth and breadth of benefit across multiple target organ systems, and as the only approved PTH replacement therapy, we believe YORVIPATH has set a high bar and is positioned to be the standard of care in hypopara treatment for many, many years to come. Looking ahead, we expect sustainable growth in patients on YORVIPATH in both established and new markets as our clinical studies demonstrate that nearly all patients with hypopara benefit from treatment.

Turning now to Yorvel, Yorvel is the first and only approved therapy for children with achondroplasia to offer continuous systemic exposure to active CNP with once-weekly dosing. In the third quarter, Yorvel revenue was 16 million euro. New patient demand in the U.S. has been steady through Q3. We have now around 340 patients enrolled through October, with more than 80% of these already approved for reimbursement. We see patients switching from daily therapy, returning to medical therapy, and starting treatment for the first time.

Yorvel is growing the U.S. market and is on track to unlock its potential to become the market-leading therapy for children with achondroplasia. Through October, the number of new Yorvel enrollments equals nearly half of all U.S. patients on pharmacological treatment before our April launch, and with around 70% of children with achondroplasia in the U.S. still untreated, we see a substantial opportunity ahead to address the significant unmet needs and health complications associated with achondroplasia.

In addition to showing statistically significant linear growth improvement such as height and body proportionality, Yorvel is, to our knowledge, the only therapy approved or in development to have demonstrated significant improvements in key measures of skeletal proportionality, lower limb alignment, and spinal canal dimensions compared to placebo. It has also shown improvement in health-related quality of life and physical function, with a better safety and tolerability profile compared to placebo—elements critical for chronic therapy for children.

Outside the U.S., we received a positive CHMP opinion in October and a positive COMP opinion to maintain orphan medicinal product designation, which, if approved, provides the potential for up to 10 years of market exclusivity. We now expect a European Commission decision on our MAA before year-end. If approved, we plan our first European launch in Germany in Q1 2027. We are also making Yorvel available in select international markets through early access programs and expect to recognize revenue from multiple countries outside of the U.S. and EU in the coming quarters.

Turning now to SKYTROFA, the only once-weekly growth hormone treatment to provide unmodified somatropin. SKYTROFA remains the number one long-acting growth hormone by value in the U.S. Third quarter revenue was 59 million euro, driven by higher patient demand. Now to our second driver of growth: expansion of indications across our three marketed products, which are supported by more than 20 ongoing or planned studies. For YORVIPATH, these include a U.S. trial to increase dosing up to 60 micrograms as well as ongoing multinational trials in patients aged 12 to 17. We also continue to progress a once-weekly PTH program designed for patients who have attained stable doses of daily YORVIPATH. For Yorvel, we are working to expand into additional achondroplasia age groups and hypochondroplasia.

Our ongoing infant trial is fully enrolled with topline results expected in 2027. This past quarter we presented early sentinel data for this trial that showed once-weekly TransCon CNP providing stabilization or improvement in foramen magnum stenosis as well as linear growth benefit. In addition, TransCon CNP was generally well tolerated with no reports of injection-site reactions over 52 weeks. Lastly, we plan to initiate a Phase 2 proof-of-concept trial in adults with achondroplasia before year-end, where we believe TransCon CNP might offer benefit in physical function, mobility, chronic pain, fatigue, or other areas that affect daily living.

We also expect to initiate a Phase 3 trial in children with hypochondroplasia this quarter. For SKYTROFA, which is being studied in more indications than any other long-acting growth hormone, our basket trial in patients with ISS, SGA, growth hormone deficiency, and Turner syndrome is progressing. With growth hormone deficiency representing only about 50% of the available growth hormone market, approval across these indications could double the patient population addressed by our current label. We anticipate completing enrollment in this trial in the first half of 2027.

Combination therapy with TransCon CNP and TransCon growth hormone is another important program. Market research suggests this unique combination could become the future standard of care in achondroplasia. Our Phase 2 CoRE trial showed that TransCon growth hormone added to therapy with TransCon CNP led to significantly improved efficacy versus TransCon CNP monotherapy, with up to 3- to 4-fold greater improvement in achondroplasia-specific height z-score as well as improvement in arm span and body proportionality, sustained through 78 weeks without any compromise to safety or tolerability.

Patient recruitment for the Phase 3 combination trial in children with achondroplasia has started, while a separate Phase 3 combination trial in children with hypochondroplasia is planned to be initiated in 2027. We continue to expand our global commercial presence across all three products, working toward full commercialization of our products in more than 50 countries. Turning now to the third driver—new products. As I mentioned up front, the TransCon technology platform enables the creation of highly differentiated new products, which we believe will be a major driver of sustainability for Ascendis Pharma, with complete freedom to apply our TransCon technology also in metabolic and cardiovascular diseases. We are progressing multiple programs in these areas. We are executing on our goal of advancing at least one new product into clinical development each year, adding new products to our endocrine rare disease franchise and creating a new therapeutic focus, which we will disclose in the coming year.

We look forward to providing a more comprehensive update on our early-stage pipeline programs in early 2027. In closing, our three approved products are driving a financial transformation of Ascendis Pharma, which we expect to further strengthen with expanded labels and global geographic expansion. We are self-sustaining and our operating cash flow is increasing. We built our company to benefit patients through internal product innovation. By always putting patients first, we believe Ascendis Pharma will deliver consistent, durable growth for many years to come.

With that, I will turn the call over to Scott to review our financial results.

Scott Smith (Chief Financial Officer)

Thanks so much, Jan. I will touch on some key points surrounding our third quarter financial results. For further details, please refer to our Form 6-K filed today. Success of our research and development and commercial capabilities has led to three consecutive new product approvals and has transformed Ascendis Pharma into a leading global biotech company reaching patients around the world. Total product revenue for Q3 2026 was 366 million euros, up 89% year over year and up 51 million euros sequentially, reflecting continued durable growth of Yorvipath, globally consistent, profitable development of Skytrofa, and continued growth of UVWell in the US since its launch in Q2 this year. Yorvipath revenue was 291 million euros in Q3, up 39 million euros from Q2, reflecting consistent new patient demand trends and metrics in the US and continued consistent growth outside of the US in growth disorders.

Skytrofa performance was steady with revenue of 59 million euros in Q3, up 4 million euros sequentially. UVWell revenue in Q3 was 16 million euros, doubling from 8 million euros in Q2, its first quarter on the market in the US, reflecting steady initiation demand and high approval rates. Turning to expenses, operating expenses fell to 217 million euros in Q3, down 32 million euros from 249 million euros in Q2, primarily driven by lower litigation costs and timing of commercial initiatives. Reported operating profit was 125 million euros in Q3; non-IFRS operating profit was 156 million euros, reflecting a margin of 42%. Refer to our press release for more details. Cash flow from operating activities was 189 million euros in Q3, and for full year 2026 we now expect cash flow from operating activities of at least 600 million euros.

We ended Q3 2026 with 964 million euros in cash, an increase of 152 million euros from the end of Q2, primarily reflecting operating cash flow, partially offset by 52 million euros of treasury share purchases. Subsequent to September 30 through November 11, 2026, we spent an additional US$273 million repurchasing 1.2 million ordinary shares of Ascendis Pharma. To date, we have repurchased a total of 2 million shares for approximately US$460 million.

Turning to our outlook for the fourth quarter of 2026: for Yorvipath, we expect growth and performance consistent with prior quarters in the US and outside the US. For Skytrofa, we expect relatively stable revenue in the US. For UVWell, we expect demand growth and approval trends to continue in the US. In addition to these drivers, we expect additional growth to come from continued global commercial expansion of Eurovision and availability of UVWell in select international markets, as well as launches in the EU.

Longer term, we expect label expansion activities across our existing portfolio and investments in our new TransCon product pipeline to drive launch of new indications, new major markets, or new products each year, reflecting our solid foundation for achieving our revenue goal of more than 5 billion euros in 2030 and 10 billion euros in 2035. With that, operator, we are now ready to take questions.

OPERATOR

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again, and we ask you to please limit to one question and please return to the queue for any additional questions. And our first question today is going to come from Jessica Fye with J.P. Morgan. Your line is now open.

Jessica Fye (Analyst)

Hey, guys, good morning. Thanks for taking my questions. You mentioned ambitions for multiple new blockbuster products and a new therapeutic area. So when could we expect to learn more about what that new therapeutic area might be, and are the new blockbusters you alluded to within endocrinology or in the new area? Thanks.

Jan Mikkelsen (Chief Executive Officer)

Thanks, Jess. You know, we have a really, really strong focus on building unbelievable sustainability, and when we look at the two fundamental elements we have in our Vision 2030, one is to drive revenue, which clearly we’re doing extremely well. The other one is to focus on building sustainability in it. And what we are accepting is that, yes, we can continue to make a few major blockbusters inside rare endocrine diseases, but we are also in a situation where we’re feeling now we are equipped to take up a new therapeutic area.

The therapeutic area will be built with a foundation for at least two to three new products in a pipeline, as we did in rare disease endocrine. This is the only way we believe we can have the responsibility to really create synergies, have economy of scale, and really build up an internal commercial organization to support such a new therapeutic area. We believe that the majority of these new products will be done by internal development. But we are also extremely open, when we see a new therapeutic area, that we potentially will analyze one or two products that can basically work in synergy with the internal development of that.

And when do you want to get that knowledge? It will come in the coming year. We feel the key element for us is we are not discussing so much of our early stage. We feel that from the element of what we see with TransCon CNP, where we went out too early to discuss it, we got the consequence of that. So from that perspective, we keep it much, much longer by us. And we also believe that it’s less material for us from the way we see how we develop in the product revenue perspective.

But there’s no doubt, which we already started this year, to develop at least one new product every year that is built on a new chemical entity.

OPERATOR

Thank you. And the next question will come from Tazina Mod with Bank of America. Your line’s open.

Tazina Mod (Analyst)

Hey, guys, good morning. Thanks for taking my question. Quick one for you, Jan, and then a follow-up on a bigger picture. Are you still trending at about 1,000 scripts per quarter for Yorvipath? And then secondly on operating cash flow, you’ve given us an increase in guide for that for this year. Can you talk about longer term how we should be thinking about the importance of that number and the rate of increase next year and beyond? Thanks.

Jan Mikkelsen (Chief Executive Officer)

Thanks a lot, Tazina. What we did with Yorvipath is basically the way we also will do it with UVWell. When we came out with Yorvipath, we gave you unique prescriptions quarter by quarter in the US and gave you some kind of algorithm for ex-US. And when we felt that we have done that in sufficiently many quarters, where we basically are moving over to what I call the results of everything — revenue — we will stop giving basic unique new enrollments every quarter.

We feel that when we have perhaps four to five quarters — perhaps shorter, perhaps longer, depending on how things go — then we will be in a position that you can really develop a model, really solid, on the revenue numbers, how we are progressing in the future. And at that time we will stop giving unique prescription numbers for UVWell.

OPERATOR

Thank you. And the next question will come from Gavin Clark-Gartner with Evercore. Your line’s open.

Gavin Clark-Gartner (Analyst)

Hey, guys. Great quarter. Just on Yorvipath — so the press release noted ex-US really strong new patient demand. I just wanted to clarify, are you saying there that the ex-US revenue is accelerating or increasing from the trends that you were seeing before? And on the US side for Yorvipath, were there any other trends to call out this quarter? Just kind of like a change in continuation rates over time? Anything on channel inventory or anything else to call out there?

Jan Mikkelsen (Chief Executive Officer)

I think I will give just a little bit more of a big picture about how we see the world, and then we can go down to the more concrete definition. And I think both Scott and Jay would like to add into it at that time. So when I see the world — and I like to make it a little bit simplified — I take just US, and then I take ex-US. Even ex-US is a big box of many boxes, or many different ways to do it. US has a pretty fast penetration. When we think about Yorvipath, it looks extremely stable, as you have seen it quarter by quarter when we’re referring to the elements of unique new enrollment. And nothing has changed to what we have said before. We always expect to get about 1,000 new patients every quarter. So that can give you a simple modeling in it.

When we come to ex-US, we need to accept that it is built on many, many different boxes. Part of that is Europe, where we got an approval with EMA, and we are now building one country by another country to be fully reimbursed. Many of these countries today — basically the vast majority of ex-US — are built on named-patient programs and early access programs. They are fine, but they are not like a full commercial thing. So ex-US is much, much, much slower than the US, and you build it gradually and you take box by box by box.

But in the end, if you have enough, 50 boxes, you really have a tall house in the end. And this is what we’re doing in the ex-US, and you can hear what we said: thirteen countries more or less fully commercial. Two of them just came in the last month. I can give you the names — it was basically Switzerland and Norway. Two more come in next year. We believe at least 15 new will come in. And when these countries get fully commercial, you start to accelerate.

But it’s slow in the beginning, but it comes. That is why, when we look at our progression and peak, the 5 billion in 2030 is not really the peak sales of our current product opportunities, even in the existing indications, because it takes much longer basically to hit peak sales in this way. Jay, Scott, do you have anything to add?

Jay

Sure. Go ahead, Scott.

Scott Smith (Chief Financial Officer)

I’d just say from my side, nothing to add.

Jay

And on my end, I was just going to reaffirm Jan’s narrative around continued momentum in the US, right? So no trend break. We’re still incredibly encouraged by what we’re seeing. When you think about what Jan had shared in his opening remarks, in that there’s still ample opportunity in the US as you think about the number of patients that have not yet been exposed to Yorvipath but could potentially benefit from it, we are seeing that continued steady uptake in those patients that historically have not experienced Yorvipath before.

And then across all metrics, when we look at both adoption rate, field execution — whether it’s breadth or depth — again, we’re seeing that continued stability and momentum that you would hope and expect for a market that’s continuing to grow.

Jan Mikkelsen (Chief Executive Officer)

Thanks, Jay. And don’t forget, there are still new patients coming in every year, three to four thousand new patients every year. And I believe, when Yorvipath is really taken up as an established treatment, when you get the diagnosis of chronic hypoparathyroidism, I believe a much, much, much larger portion of these three or four thousand patients will basically take it very, very naturally to immediately start on PTH replacement therapy with Yorvipath.

Thanks, Gus.

OPERATOR

Thank you. And the next question comes from Yaron Werber with TD Securities. Your line’s open.

Yaron Werber (Analyst)

Great, thanks so much. Maybe just a couple of questions. One for Scott. I think you announced a 400 million share buyback in September, and from the calculation I think you’ve essentially bought back about 273 just this quarter. Just how much is left now for you to deploy? And then secondly on UVWell, I think BioMarin is saying that they’re seeing now a share loss of sort of 5% more recently, kind of ongoing losses. And it sounds like you’ve done about 60 PFSs in each of the last two months of the quarter — let’s call it August, September.

Is that sort of a good runway to consider for Q4 and onwards? Thank you.

Jan Mikkelsen (Chief Executive Officer)

Let me take the last question. I don’t think we have the capability to understand BioMarin’s numbers, and so I will ask you to refer this question to BioMarin directly. We know how many new patients we’re getting every week, so I think that is the key element for us. Scott, will you take the first question?

Scott Smith (Chief Financial Officer)

Yeah, Yaron, on that, we spent about 330 million out of the 400 million that we announced in the current program. We also, in the total, had a program at the beginning of the year and of course, you know, there’s potentially additional programs coming, but total about 330 out of the 400 so far. So we have done what we said we want to do. I think we have bought back around 2 million shares now. So that is a really sustainable part of the share just this year. And, you know, when we look forward, we will have ample free cash flow the coming year. I’m not saying we can buy back all the shares, but at least we can buy a sustainable amount of.

OPERATOR

Thank you. And the next question will come from Joe Schwartz with Leerink Partners. Your line is open.

Joe Schwartz (Analyst)

Hi, thanks. Can you talk about Yorvipath’s progress penetrating the different subpopulations of patients you outlined at the launch, those who are uncontrolled, partially controlled, and controlled? And is that still the right way for us to best understand how you can continue to generate at least 1,000 new patient enrollments each quarter? Thanks.

Jan Mikkelsen (Chief Executive Officer)

Thanks, Joe. Let me go back and give you a little bit the aspect of how we see the fragmentation of the hypopara patients. First of all, there is no medical definition of mild, moderate, or severe of hypopara. It’s like being pregnant. You’re pregnant or not—the same as hypopara. You have hypopara or not. Then you can say the burden of the disease for the society, for the patient, can vary. And this is where you can say when we, for example, make health economic calculation in some countries, we basically are defining patient groups where there is a huge burden for them, and they’re taking it up as the preferred treatment start.

In this way, when we look at the clinical data we have generated, there is not one single patient group where we do not see a major benefit of being on Yorvipath treatment. So when you take it from a clinical perspective, I would say basically nearly everyone should be on treatment with Yorvipath. Then you can talk about some patient groups that are much more already motivated to it. And I think Jay can give a really great way how we’re activating different patient groups.

But it’s not from the perspective that there is more or less a treatment benefit, because all of them will see a major treatment benefit.

Jay

Yeah, and thank you for opening that commentary. In addition to severity, what I would say is we also think about patient segmentation in the etiology of the disease, and we also see that whether it’s a genetic driver or whether it is post-surgical. And again, we see consistent uptake across all groups in that regard. As Jan mentioned before, because severity is not a clinically defined definition from a quantitative and claims-based perspective, that is not something that we would be able to track quantitatively in a reliable and meaningful way.

But when you look at the underlying fundamentals, this is where we do feel incredibly encouraged. I mentioned earlier, we’re still seeing strong metrics across the board. So, for example, we’ve added another 300 new prescribers in just the last quarter alone, which shows you that despite the fact that this space is incredibly diffuse, we’re still seeing additional traction around physicians prescribing for the first time. For existing physicians that had prescribed in an earlier cohort, we’re also seeing them prescribe a greater number of patients.

So the depth of prescription has also been increasing, which again reaffirms perhaps what your hypothesis was in the original question, which is, are we also seeing uptake in additional types of patients? And from that lens, we do see that the breadth and the depth specifically of the patient types is also increasing. And then lastly, when you think about how we’re continuing to shape this market, it is a large market in the US—about 70,000 to 90,000 patients prevalent. So we know that a lot of our efforts need to be not just about educating physicians, but about educating patients, since sometimes and often the limiting factor is a patient themselves may not have established care or have not gone in to see their endocrinologist recently.

So we’ve been investing quite a bit in both digital efforts, education and awareness campaigns, in addition to supporting patients throughout the journey, especially as they are seeking to understand, to learn more about the therapy itself.

Joe Schwartz (Analyst)

Thanks for all the color.

Jan Mikkelsen (Chief Executive Officer)

Joe, just to follow up on it, you can say when we made the initial way to look on patient, it was not in a clinical perspective. There was a way how we defined how often we’re seeing an endo, because we wanted to be quite sure that the barrier for a patient to see an endo will not be a barrier for being prescription. So we would focus on the areas where we know there were patients coming already in a predefined time frame to see an endo, and that was what we started in the beginning, where we called uncontrolled patient, if you see the endo perhaps four times a year or something like that.

What Jay is doing now with his already amazing effort in, for example, direct TV campaigns and other things, is he’s building up that now we start to understand, I need to go to the doctor because I really have a symptom of having this. And this is why we, for example, have taken the group that we call controlled, which was nearly half of them, because we only see perhaps an endo every second year. They’re starting now to go in, and therefore they have the possibility to come in on treatment.

So you can see what Jay is doing. He’s basically following up on the same way we were thinking when we started the launch. And this is likely why it’s so successful, and we see this constant flow every quarter.

OPERATOR

Thank you. And our next question is going to come from Derek Archila with Wells Fargo. Your line is now open.

Simona (Analyst)

Hi, this is Simona for Derek. Thanks for taking the question. I had a question on the operating leverage. So as the Yorvipath launch scales, how should we think about the cadence and key drivers of operating margin expansion into 2027? Where should the greatest leverage come from? And how much continued investment should we expect behind the commercial infrastructure?

Jan Mikkelsen (Chief Executive Officer)

I think this is such a complicated question that it needs to go to Scott.

Scott Smith (Chief Financial Officer)

Yeah, I mean, I think that you’ve obviously seen pretty dramatic increase in the operating margin in the last three quarters. So, you know, at mid to low 40s is pretty good. I think that part of what you’re asking for requires us to give the 27 outlook, which I think potentially we come with that early in 27. But for the time being, I would refer to my prepared remarks on the development of the three products with the three indications as well as near-term launches.

And then maybe, you know, maybe if there’s other comments to add. But I think that our commercial infrastructure is fairly well built. I don’t know, Jay, if you want to comment more on that. But I don’t see large developments in our commercial SG&A infrastructure, and at the same time, investing as much as we are in R&D for the near term, it’ll probably be not a large amount of euro that we’re putting in place.

Jay

I agree with that, Scott. From a commercial infrastructure standpoint, we’ve largely built out to the scale that we need to sustain what we believe will fuel future growth for our products, both in the US as well as I think we’re in the right ballpark outside. We do envision that we’ll continue to have investment outside of the US, again, as Jan mentioned in his prepared remarks as well, but I think we’re in the right ballpark.

OPERATOR

Thank you. And our next question is going to come from Lai Watsik with Cantor Fitzgerald. Your line is open.

Lai Watsik (Analyst)

Hey guys, congrats on the quarter. Maybe just one on your view. Well, it looks like you’ve got pretty strong demand in the U.S. I wonder if you can just comment on the potential impact from the oral drug coming to the market next year and what do you hope to accomplish with your recent citizen petition letter?

Jan Mikkelsen (Chief Executive Officer)

I think there was a multiple question into your question. In this way, the way we have developed Yorvipath and our TransCon CNP, we have built it on different stages. Stage one is the monotherapy where we have now approved Yorvipath in the US. We have a positive opinion and 10 years positive opinion for orphan exclusivity. In Europe we see how it is penetrating with a speed that really talks about how it is really being defined as an improvement to existing therapy.

In this way we are in a position that this is a stage one because when we look on the combination therapy that is coming now afterwards, we actually see that we are in a position we can have such an integrated treatment regime that we can completely avoid all surgical procedures for a patient and basically generate a treatment regime really addressing all the major comorbidities. This has been our wishes, this has been our aspiration to have such a strong integrated packet combined with the mono and the dual therapy that we really can provide to the patient, to the physician, to the society.

A treatment regime where you address all the established comorbidity that you have seen today. Any new treatment needs to show the same thing. First of all, it needs to show the safety, and what we have seen with all the years—and I will not say I do not know how many CNP years that have been treated with CNP therapy—it really has proven to be one of the safest treatments we ever have seen. That is really being recognized by physician, patient, and other elements. And the way we provide and give CNP therapy with our sustained release has really shown complete new improvement that has not been seen with the short-acting CNPs.

And that is what you need to do, and how from that perspective you can say that it’s not only the efficacy that you need to have the integrated package, but you also need to show the safety in all aspects. Because safety is the key element in any pharmaceutical development, and specifically when you come to a growing child, there are so many processes throughout the body that need to be matured in the right manner. And this is where there is so much literature that working with non-specific tyrosine kinases has shown unexpected side effects in preclinical models.

And we feel obligated to live up to our values about safety first for the patients. And from that perspective we are not asking any product to be stopped. We believe in choices for patients, but we’re asking to be sure that it’s going to the right safety perspective in it. And that is the only thing we are asking for. And I feel everyone should do that. You should do it. Everyone should do it. Everyone should do. Because we are here to benefit the patient and the society and everyone.

OPERATOR

Thank you. And our next question will come from Yan Zhang with Wedbush. Your line is open.

Yan Zhang (Analyst)

Hi, good morning. Thank you very much for taking the question. And this is actually related to your comments to the previous question. So, combo therapy for achondroplasia. I believe you said before that you don’t expect the treatment option to be a chronic one for patients. So just curious, what do you see as the potential impact on the revenue growth? Is it mainly for patients that are already on monotherapy or potentially can drive new patient adoption?

And on the revenue, so ex-US versus US, do you expect the same pattern as Voxzogo that eventually majority of the revenue will be coming from ex-US? And so at what point do you expect that change to happen? Thank you very much.

Jan Mikkelsen (Chief Executive Officer)

Okay, the question is about how do we really, as I understood you right, the combination therapy, how do we see that into the fundamentals of the therapy we have with CNP? No doubt CNP is the fundamental therapy. What we have seen with the combination and dual therapy, by adding in growth hormone, you basically are boosting the effect 3 to 4x in effect size. Meaning is that if you just look on linear growth, you’re basically getting in one year the basic element of three to four years monotherapy treatment in it.

And I believe that is a really unique opportunity for any child to reach a new level. But what this also doing is unlocking new biology where we see much less effect. For example, on arm span. I’m just taking one thing, arm span on monotherapy. But when we combine it, basically in the element of a dual therapeutic growth hormone, we see that you are in a position that you’re getting such a growth that you basically can avoid arm lengthening procedure because it’s growing to a complete different level which you can achieve with monotherapy.

So therefore the combination of these two, where you have a paracrine system with CNP, overcome the active FGFR3 receptor, you basically unlock a complete new biology treatment with a growth stimulation effect by growth hormone. And I believe this is a paradigm shift that’s totally taken up in a complete new bar. And you ask me a question, how do I see it? Because when you look on both geographies it has a very unnatural way to have revenue recognition for, you can say, a typical rare disease product because it’s recognized about 75% ex-US compared to 25% in the US. Typically you will say it will be 60/40 or 50/50, or 60/40, which is perhaps the most normal where 60 will come from the US. And so when I see it, what is really the missing factor? Missing factor is US people saying this product is doing exactly well ex-US.

I have a complete different view. It did horrible in the US, and why did it not do really good in the US? Because it was not really going in and providing the benefit to the patients. What they really wanted to have, they wanted to see that you can address comorbidities. And that is what we are focused on. We accept that we will provide length, but we also know that what we really are focused and really addressing, which are really appealing for everyone: if you can avoid a child to go to years of operations, leg bowing, other things like that, then everyone can say it makes sense to be on treatment.

So what I expect to see, I expect that we will see the same great penetration ex-US. We will take over the market exactly as we do in the US, and we will see a much larger growth inside the US.

OPERATOR

Thank you. And our next question will come from Faisal Kershead with Jefferies. Your line’s open.

Faisal Kershead (Analyst)

Hey guys, thank you for taking the question. Congratulations on starting the CATCH phase three combination study. I just want to ask one quick, detailed question on the trial design. So could you explain why there is a monotherapy growth hormone arm in this study and also like how you’re thinking about sort of the potential for long duration of benefit for the combination. Thank you.

Jan Mikkelsen (Chief Executive Officer)

Yeah. The question is referring to why we redesigned our phase three trial. And I totally honest, yes, we redesigned it because we got strong regulatory feedback and we don’t want to run a phase three trial without being successful and get it approved in the end. And from the US that was a strong side to live up to what we call the rules of combination. And that meaning you need to evaluate the contribution of each single element in a combination trial.

And this is why that came, and we built in an independent arm that only are providing a TransCon growth hormone. And those why it started with three active arms instead of two active arms. So basically to sum up, you have a TransCon CNP active arm. You have a TransCon growth hormone active arm. And then you have a combination or dual therapy arm. And all of them are randomized and all of them are aligned in a mathematical way how we really can show improvement compared to each single arm.

And it was why the trial exactly got enlarged and also got delayed a few months.

OPERATOR

Got it. Thank you. Thank you. And the next question will come from Kalpit Patel with Wolfe Research. Line’s open.

Jan Mikkelsen (Chief Executive Officer)

Yeah, I think just I would take only one part of that question. Is disease severity. There is no definition of disease severity from medical terms. We defined something like controlled or uncontrolled, but it was mainly defined for how often there was seen an endo. There is not in any guidelines or any place any element that define the severity of the disease in this way. Jay will explain how he’s driving out all the different campaigns and what element is.

There are few countries. I actually think there’s only two countries in the world where you can make direct-to-TV campaigns, and one of them are US.

Jay

Yeah, that’s right. So in the US specifically, we are seeing initial encouraging signs that the educational and advertisement campaigns that we’ve been making have been reaching the right communities in order for them to be able to learn more about the product and then ultimately actually initiate conversations with their endocrinologist. As an example, we’ve seen an uptick in the number of patients or prospective patients leveraging find provider tools.

And then anecdotally, we’ve also heard a number of patients that have come through the funnel actually cite some of the educational campaigns as the first time that they actually saw something that mirrored what they were experiencing that actually inspired them to go see an endocrinologist. So while a lot of that information is anecdotal to start, what is typical with some of these campaigns is that it does take multiple impressions for them to actually inspire some kind of change in action or behavior. So a lot of that deeper, more quantitative analysis, it’ll take some time to be able to get a better view for what that full picture looks like.

As Jan had mentioned before as well, around patient severity, because it’s not a clinical definition that can be traced back to something quantitative in claims, what we are resting on is mostly qualitative insight and again based on what we said before, both in terms of the depth of prescribing which is increasing at a physician level, which suggests that they’re prescribing to a broader base of patients that they’re seeing, coupled with qualitatively we do hear patients again historically not connect symptom to disease that are now doing so.

Both of those things in tandem suggest that we are fundamentally shaping the types of patients that come in, even if it is not a clinically defined type of patient.

OPERATOR

Thank you. And our last question will come from Maxwell Score with Morgan Stanley. Your line is open.

Maxwell Score (Analyst)

Great. Thank you very much for taking my question. So just on hypochondroplasia, how are you thinking about the size of the diagnosed treatable population relative to achondroplasia and where do you see TransCon CNP fitting into the treatment landscape as it evolves? Thank you.

Jan Mikkelsen (Chief Executive Officer)

Interesting question because with genetic testing you actually redefining patients that, for example, often was qualified into ISS, idiopathic short status, if you didn’t have clear phenotypic—you can say phenotypics that got associated with the hyperactive FGFR3 receptor system. And today when we defined it, we likely are defining from genetic testing where people always need to have a genetic testing but also at the same time have phenotypical effect on it.

So we have trials going on in ISS which are pretty successful in this way, and we see growth hormone as really the fundamental treatment in the ISS population. But if we go over to hypochondroplasia there should be well-defined mutation in the FGFR3 receptor and it should be localized such a way that it also have so huge impact that it provide a phenotypic effect on it. So you could say we use a little bit more a narrow definition of hypochondroplasia, but it is also related to the reimbursement system that exists in many countries where if you want to utilize a more costly therapy, you also need to justify it to the clinical benefit you get to the therapy.

Maxwell Score (Analyst)

Great, thank you.

OPERATOR

Thank you. And this is all the time that we have for questions today. This will also conclude today’s conference call. Would like to thank you for joining. And now you may disconnect.

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