Biotech stock Ascendis Pharma reversed a plunge Thursday after its growth hormone deficiency treatment, Skytrofa, missed first-quarter sales estimates.
The Food and Drug Administration approved Skytrofa for children with insufficient growth hormone last August. But many patients apparently continue to receive free treatment, SVB Securities analyst Joseph Schwartz said in a report to clients. As a result, Skytrofa sales were just 1.9 million euros — roughly $2 million. Wall Street had predicted roughly double that.
"Based on prescription growth quarter over quarter, we believe that sales should come through once patients are converted over to commercial therapy," he said. "However, the timing remains unclear and we are lowering our sales estimates as a result."
But after falling as much as 21%, the biotech stock pared its losses and gained 2.5% to close at 80.01 on today's stock market.
Biotech Stock: Revenue Beats, Losses Widen
Overall, the first quarter ended up mixed. Total revenue came in at 6.8 million euros — about $7.1 million — and easily topped forecasts, according to FactSet. But Ascendis had a wider-than-expected loss that also grew year over year.
Still, SVB's Schwartz noted Skytrofa uptake is so far encouraging. As of March 31, 349 physicians have prescribed the weekly injection 978 times.
"While it appears that Ascendis is doing a good job of converting the pediatric market to Skytrofa (from daily growth hormone), it appears that converting them to commercial therapy is taking some more time based on reported sales," he said.
It appears Ascendis is willing to sacrifice near-term sales to gain share as it competes with big names like Novo Nordisk, Schwartz said.
Schwartz kept his outperform rating on the biotech stock. He has a 174 price target on Ascendis stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
