Ascendis Will Rise Higher On 'Game-Changing' TransCon Technology, Stifel Says In Bullish Initiation

Ascendis Pharma A/S ASND shares are up 180 percent year-over-year, but one analyst thinks the Street hasn’t been generous enough.

The Analyst 

Stifel Nicolaus analyst Adam Walsh initiated coverage on Ascendis with a Buy rating and $85 price target.

The Thesis

By Walsh’s assessment, the Street has been blinded by underwhelming sales of Shire PLC (ADR) SHPG’s Natpara and now underestimates the peak potential for Ascendis’ competitor, TransCon PTH. (See the analyst's track record here.) 

“We think lagging Natpara sales are more due to idiosyncratic deficiencies of the drug itself — shortcomings reflected in the label and well-understood by prescribing physicians,” Walsh said in a Tuesday note. “We believe TC-PTH may fix these shortcomings as evidenced by recent encouraging P1 data that confirmed the optimal profile of a true hormone replacement therapy.”

Stifel expects fourth-quarter data for TransCon CNP to affirm the drug’s prospects and sees TransCon growth hormone presenting positive Phase 3 results in the first quarter of 2019 — an occasion that could boost shares 60 percent, the analyst said. 

After that, Ascendis is expected to expand its focus from the $1-billion endocrine rare disease market toward other lucrative indications.

“We view the company's proprietary TransCon technology as game-changing in its potential to fix the pharmacokinetic and related clinical shortcomings of both currently approved blockbuster drugs as well as others in development."

Price Action

Ascendis Pharma shares were rallying 4.67 percent to $68.97 at the time of publication Tuesday. 

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