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Press Release

Pharming Group Reports Financial Results for the First Nine Months of 2017

Pharming Group
Posted on: 26 Oct 17

LEIDEN, The Netherlands, October 26, 2017 /PRNewswire/ --

Strong increase in revenues boosts operating profitability and positive cash flow 

Strong outlook with increasing revenues expected for remainder of 2017  

Pharming Group N.V. ("Pharming" or "the Company") (Euronext Amsterdam: PHARM), the Dutch specialty pharmaceutical company developing innovative products for the safe, effective treatment of rare diseases and unmet medical needs, presents its (unaudited) financial report for the first nine months and the third quarter ended 30 September 2017.

Financial highlights 

Revenues for the nine months to 30 September increased to €56.7 million (2016 €8.7 million), with Q3 alone €25.9 million ($30.5 million, up 73% on Q2 2017), due to strong growth in US and EU sales

Q3 operating profit up to €8.5 million compared with a loss of €3.2 million in Q3 2016

Q3 net result improved to €7.5 million loss compared with a loss of €24.5 million in Q2

Positive cashflows during Q3 increased the cash position to €38.6 million from €25.2 million at June 30 2017 (and €17.0 million at 30 September 2016)

 

Operational highlights during the third quarter 

On September 11, following the conclusion of the End-of-Phase 2 interactions with the US Food and Drug Administration (FDA), Pharming announced that it will submit a supplemental Biologics License Application (sBLA) to the FDA for review in Q4 of this year for prophylaxis of angioedema attacks in adolescent and adult patients with hereditary angioedema (HAE) as an expanded indication for RUCONEST® [Recombinant Human C1 Esterase Inhibitor/ conestat alfa]

On September 26, the Company, in association with HAEi (the international umbrella organization for the world's HAE patient groups), announced the appointment of Inceptua Medicines Access as their new distribution partner for the "HAEi Global Access Program" (HAEi GAP) enabling patients in all countries where Pharming's product RUCONEST® is not commercially available to gain access to the drug through an ethical and regulatory-compliant mechanism  

Positive results were obtained from a Phase II clinical trial investigating the use of RUCONEST® for the treatment of HAE attacks in children

 

Post period highlights 

The RUCONEST® US Biologics License Application has been transferred from Valeant Pharmaceuticals International, Inc. ("Valeant") (NYSE/TSX: VRX) to Pharming, following the acquisition of the North American commercial rights to the product in December 2016

 

Sijmen de Vries, Chief Executive Officer, commented: 

"These are excellent quarterly results and show that we are on the right track with our strategy for RUCONEST® in all markets. We now see real growth in terms of both volume and value for RUCONEST®. In addition, we continue to make good progress with our pipeline research and development programs. 

Towards the end of the quarter we were informed of acute shortages of HAE medication as a result of manufacturing issues for certain competitor HAE products, mainly in the US. To help resolve this situation for patients, we immediately offered instant access to our patient care programme, RUCONEST® SOLUTIONS, including its free starter medication and bridging support for those patients in acute need of alternative medication to treat their HAE attacks. We have therefore been supplying considerable amounts of RUCONEST® free-of-charge to cover treatment of attacks for the period during which those patients are being cleared for RUCONEST® reimbursement. Patients are at the very centre of Pharming's business and we are doing our best to ensure that HAE patients get effective treatment. As a result of this situation, we have accelerated planned increases in capacity across our supply chain. We do not believe this situation has had any real effect on our results for the third quarter, but it is likely to have a positive effect on the company's performance in the fourth quarter." 

Financial summary 

3rd Quarter and 9 months to 30 September 

2017 2017 2016 % Amounts in EURm except per share data 3rd Quarter 1st 9 months 1st 9 months Change Income Statement Revenue from product sales 25.9 56.0 7.0 700% Other revenue 0.2 0.7 1.7 (59%) Total revenue 26.1 56.7 8.7 552% Gross profit 21.8 48.8 5.5 787% Operating result 8.5 12.7 (9.4) 235% Net result (7.5) (37.7) (10.4) (263%) Balance Sheet Cash & marketable securities 38.6 38.6 17.0 127% Share Information Earnings per share before dilution (EUR) (0.015) (0.077) (0.025) (208)%

 

Commentary on the Report 

The third quarter of 2017 demonstrates the strong growth in Pharming's RUCONEST® sales and validates our strategic decision to reacquire the commercial rights to the product in North America last year.  Importantly, it was the first full quarter in which we saw the full potential of the integrated commercialization team that we have built for RUCONEST® in the US, as well as the Company's careful expansion into western EU markets. As a result, Pharming has delivered an operating profit and generated positive net cash flow during each of the last three full quarters since we regained the US rights for RUCONEST® and the Company is close to achieving sustainable net profit.

Net product sales for the nine months to 30 September increased to €56.0 million (Q3: €25.9 million), an increase of 700% compared to the nine months to 30 September 2016 (€7.0 million), mainly as a result of the increase in volumes generated by Pharming's full commercial team in the US and significant market share gains in European and RoW sales.  Total revenues for the first nine months of the year increased by 552% to €56.7 million (including €0.7 million of license revenue) from €8.7 million in 2016 (including €1.7 million in license revenue).

An operating profit of €8.5 million was achieved in Q3 2017, compared with an operating loss of €3.2 million in Q3 2016. The nine months' operating profit was €12.7 million in 2017 compared with an operating loss of €9.4 million for the same period in 2016, despite considerable investments in the ramp-up in commercialization activities, especially in the US.

The nine months' net result was a loss of €37.7 million (H1 2017: €30.2 million), compared with a loss of €10.4 million in the same period last year. The improvement in the quarter to €7.5 million loss resulted mainly from improved operating profits and the elimination of regular non-cash financing adjustments required to be shown under IFRS following the refinancing of bonds and debt in May 2017.

The net result includes €14.0 million relating to fair value adjustments for the Ordinary Bonds, arising from the strong increase in the share price over the third quarter. This is an entirely theoretical non-cash accounting adjustment required under IFRS which has no cash effect on the company.  The net result during the third quarter without this adjustment would have been a profit of €6.5 million.

The increase of €2.0 million in other financial expense during the quarter related to the cash interest on the Orbimed loan and the Ordinary Bonds.  The cash element of these expenses was €1.9 million.

The equity position reduced slightly to €6.2 million at the end of September 2017 from €6.8 million at the end of June 2017, mainly due to the conversion of Convertible Bonds and warrants into shares and the net loss of €7.5 million caused by the revaluation of the derivative financial liabilities.

Inventories changed from €17.5 million at the end of June to €18.0 million at the end of September, largely due to the increasing manufacturing activities to meet anticipated sales demand in the US resulting in a greater proportion of high value finished goods.

Positive cashflows during Q3, driven by increasing revenues, together with the proceeds from warrant exercises, resulted in an increase in the cash position to €38.6 million from €25.2 million at June 30 2017 (€17.0 million at 30 September 2016).

US revenues continued to be affected by the changing exchange rate between US dollars and Euros during the quarter, but the negative effect on the revenues is largely balanced out by the positive effect on costs and on the company's debt, which is mostly denominated in US dollars for this reason.

We look forward to the remainder of 2017 and expect an increase in patients treated with RUCONEST®, as a result of the underlying demand.  We therefore remain confident that sales in the last quarter of this year will increase and that 2017 will be the first operationally profitable year for Pharming.  We should start 2018 on a very strong footing with new opportunities to enhance shareholder value further.

The Board of Management 

Pharming Group N.V. 

Outlook 

For the remainder of 2017, the Company expects:

FY 2017 revenues from product sales to exceed analysts' forecasts and for the fourth quarter results to exceed the third quarter significantly, driven by underlying increasing demand

Achievement of continued operating profit and positive cashflows for the remaining quarter

Continued investment in the production of RUCONEST® in order to ensure continuity of supply to the growing markets in the US, Europe and the RoW

Investment in the approval for RUCONEST® in prophylaxis of HAE and in further clinical trial development of a small, fast IV version and new intramuscular, subcutaneous and other delivery options for RUCONEST®

Continued and enhanced support for patients in all territories, as we continue to believe that RUCONEST® represents a fast, effective, reliable and safe therapy option available to HAE patients

Continued progress in the new pipeline programs in Pompe disease and Fabry's disease, and additional development opportunities and assets as they occur

 

About Pharming Group N.V. 

Pharming is a specialty pharmaceutical company developing innovative products for the safe, effective treatment of rare diseases and unmet medical needs. Pharming's lead product, RUCONEST® (conestat alfa) is a recombinant human C1 esterase inhibitor approved for the treatment of acute Hereditary Angioedema ("HAE") attacks in patients in Europe, the US, Israel and South Korea. The product is available on a named-patient basis in other territories where it has not yet obtained marketing authorization.

RUCONEST® is commercialized by Pharming in Algeria, Andorra, Austria, Bahrain, Belgium, France, Germany, Ireland, Jordan, Kuwait, Lebanon, Luxembourg, Morocco, the Netherlands, Oman, Portugal, Qatar, Syria, Spain, Switzerland, Tunisia, the United Arab Emirates, the United Kingdom, the United States of America and Yemen.

RUCONEST® is distributed by Swedish Orphan Biovitrum AB (publ) (SS: SOBI) in the other EU countries, and in Azerbaijan, Belarus, Georgia, Iceland, Kazakhstan, Liechtenstein, Norway, Russia, Serbia and Ukraine.

RUCONEST® is distributed in Argentina, Colombia, Costa Rica, the Dominican Republic, Panama, and Venezuela by Cytobioteck, in South Korea by HyupJin Corporation and in Israel by Megapharm.

RUCONEST® has recently completed a clinical trial for the treatment of HAE in young children (2-13 years of age) and is also evaluated for various additional follow-on indications.

Pharming's technology platform includes a unique, GMP-compliant, validated process for the production of pure recombinant human proteins that has proven capable of producing industrial quantities of high quality recombinant human proteins in a more economical and less immunogenetic way compared with current cell-line based methods. Leads for enzyme replacement therapy ("ERT") for Pompe and Fabry's diseases are being optimized at present, with additional programs not involving ERT also being explored at an early stage at present.

Pharming has a long-term partnership with the China State Institute of Pharmaceutical Industry ("CSIPI"), a Sinopharm company, for joint global development of new products, starting with recombinant human Factor VIII for the treatment of Haemophilia A. Pre-clinical development and manufacturing will take place to global standards at CSIPI and are funded by CSIPI. Clinical development will be shared between the partners with each partner taking the costs for their territories under the partnership.

Pharming has declared that the Netherlands is its "Home Member State" pursuant to the amended article 5:25a paragraph 2 of the Dutch Financial Supervision Act.  

Additional information is available on the Pharming website: http://www.pharming.com

Forward-looking Statements 

This press release of Pharming Group N.V. and its subsidiaries ("Pharming", the "Company" or the "Group") may contain forward-looking statements including without limitation those regarding Pharming's financial projections, market expectations, developments, partnerships, plans, strategies and capital expenditures. 

The Company cautions that such forward-looking statements may involve certain risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive, political and economic factors, legal claims, the Company's ability to protect intellectual property, fluctuations in exchange and interest rates, changes in taxation laws or rates, changes in legislation or accountancy practices and the Company's ability to identify, develop and successfully commercialize new products, markets or technologies. 

As a result, the Company's actual performance, position and financial results and statements may differ materially from the plans, goals and expectations set forth in such forward-looking statements. The Company assumes no obligation to update any forward-looking statements or information, which should be taken as of their respective dates of issue, unless required by laws or regulations. 

Consolidated Statement of Income 

For the first nine months ended 30 September compared to the half year results

Amounts in EUR'000, except per share data YTD 2017 YTD 2016 Product sales 55,987 7,034 Release of deferred license fee income 741 1,656 Revenues 56,728 8,690 Costs of product sales (8,007) (3,022) Inventory impairments 88 (209) Costs of sales (7,919) (3,231) Gross profit 48,809 5,459 Other income 607 265 Research and development (13,068) (11,080) General and administrative (4,308) (3,120) Marketing and sales (19,315) (911) Costs (36,691) (15,111) Operating result 12,725 (9,387) Fair value gain/(loss) on revaluation derivatives (15,186) 411 Other financial income and expenses (35,248) (1,463) Financial income and expenses (50,434) (1,052) Result before income tax (37,709) (10,439) Income tax expense - - Net result for the period (37,709) (10,439) Attributable to: Owners of the parent (37,709) (10,439) Total net result (37,709) (10,439) Basic earnings per share (EUR) (0.077) (0.025)

 


Consolidated Statement of Comprehensive Income  

For the first nine months ended 30 September compared to the half year results

Amounts in EUR'000 YTD 2017 YTD 2016 Net result for the period (37,709) (10,439) Currency translation differences (482) (2) Items that may be reclassified to profit or loss (482) (2) Other comprehensive income, net of tax (482) (2) Total comprehensive income for the period (38,191) (10,441) Attributable to: Owners of the parent (38,191) (10,441)

 

Consolidated Balance Sheet  

As at date shown    

Amounts in EUR'000 30 Sept 31 Dec 2017 2016 Intangible assets 56,735 56,680 Property, plant and equipment 7,815 6,043 Long term prepayment 1,500 1,622 Restricted cash 248 248 Non-current assets 66,298 64,593 Inventories 17,995 17,941 Trade and other receivables 17,274 12,360 Cash and cash equivalents 38,389 31,889 Current assets 73,658 62,190 Total assets 139,956 126.783 Share capital 5,201 4,556 Share premium 316,858 301,876 Legal reserves (421) 60 Accumulated deficit (315,426) (279,025) Shareholders' equity 6,212 27,467 Loans and borrowings (more than one year) 70,800 40,395 Deferred license fees income 1,667 2,270 Finance lease liabilities 471 599 Other provisions 4,674 4,674 Non-current liabilities 77,612 47,938 Loans and borrowings (less than one year) 16,908 26,136 Deferred license fees income 806 943 Derivative financial liabilities 21,121 9,982 Trade and other payables 17,031 14,054 Finance lease liabilities 266 263 Current liabilities 56,132 51,378 Total equity and liabilities 139,956 126.783

 

Consolidated Statement of Cash Flows 

For the first nine months ended 30 September

Amounts in EUR'000 YTD 2017 YTD 2016 Operating result 12,725 (9,387) Non-cash adjustments: Depreciation, amortization 2,543 447 Accrued employee benefits 1,308 1,435 Deferred license fees (741) (1,656) Operating cash flows before changes in working capital 15,835 (9,161) Changes in working capital: Inventories (54) (2,150) Trade and other receivables (9,358) (2,652) Payables and other current liabilities 2,977 2,709 Total changes in working capital (6,435) (2,093) Changes in non-current assets, liabilities and equity 524 (764) Net cash flows from operating activities 9,924 (12,018) Capital expenditure for property, plant and equipment (2,518) (922) Investments in intangible assets (2,189) - Net cash flows used in investing activities (4,707) (922) Proceeds of debt loans 89,181 - Payments of transaction fees and expenses (16,051) - Repayment and interest on loans (76,984) (1,567) Proceeds of equity and warrants 6,110 14 Interest received - 5 Net cash flows from financing activities 2,256 (1,549) Increase (decrease) of cash 7,473 (14,489) Exchange rate effects (973) (343) Cash and cash equivalents at 1 January 32,137 31,843 Total cash at 30 September 38,637 17,012 Of which restricted cash 248 248 Cash and cash equivalents at 30 September 38,389 16,764

 

 

Contacts:

Pharming Group N.V.

Sijmen de Vries, CEO, Tel: +31 71 524 7400
Robin Wright, CFO, Tel: +31 71 524 7432

FTI Consulting:

Julia Phillips/ Victoria Foster Mitchell, Tel: +44 203 727 1136

Lifespring Life Sciences Communication

Leon Melens, Tel: +31 6 53 81 64 27

 

Editor's Details

Mike Wood
PharmiWeb.com
www.pharmiweb.com
editor@pharmiweb.com

Last updated on: 26/10/2017

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