Pharming Group Reports Strong Financial Results for the First Half of 2019
Delivered 31% increase in revenue, 51% increase in operating profit and 60% increase in net profit year-on-year
Delivered 21% increase in revenue, with increases in operating profit and net profit compared to Q1 2019
Increased investment in pipeline to support long-term growth
LEIDEN, Netherlands, July 26, 2019 /PRNewswire/ -- Pharming Group N.V. ("Pharming" or "the Company") (Euronext Amsterdam: PHARM) presents its (unaudited) interim financial report for the first half year ended 30 June 2019.
The Company will hold a conference call at 13:00 CET / 07:00 EST today: dial-in details can be found on pages 4 and 5.
6 months to 30 June
Amounts in €m except per share data
Cash & marketable securities
Earnings per share (€): - Undiluted
* After restatement on the basis set out above and in Note 4 to the Financial Statements in the Annual Report 2018.
- The Company made record revenues in the first half year, an increase of 31% to €77.9 million, from €59.5 million for the same period last year. Comparing the two first quarters of this year, the increase was approximately 21% to €42.7 million in the second quarter compared with €35.2 million during the first quarter of this year.
- US net product sales increased 33% year-on-year to €75.0 million (H1 2018: €56.3 million), and 21% quarter on quarter to €40.9 million from €33.7 million in the first quarter of 2019, reflecting strong growth despite a more competitive marketplace. In Europe and the rest of the world, product sales for the first six months of 2019 were flat at €2.5 million (H1 2018: €2.5 million), mainly due to increased competition in certain Eastern European markets after competitor product launches, balanced by limited growth for Pharming direct markets which are affected by national revenue caps.
- Operating profits rose by 51% to €24.6 million, compared to €16.3 million in the same period last year, reflecting an improvement in gross margin and better cost controls. Increased expenditure on our pre-eclampsia and Acute Kidney Injury studies relative to the first quarter, on production of our alpha-glucosidase product for Pompe disease and on capacity improvements led to lower 2% growth in operating profit quarter on quarter, from €12.2 million in Q1 2019 to €12.4 million in Q2 2019.
- Net profit increased by 60% to €13.6 million, compared to €8.5 million for H1 2018. Quarter on quarter, the increase was in line with that on operating profit from €6.7 million in the first quarter to €6.9 million in the second quarter.
- Positive cashflows during the quarter were driven by strong revenue, generating almost €10 million above the cash required for operating costs. This was then reduced by the quarterly instalment of €7.7 million of the principal amount of the Company's outstanding loan including associated fees and the (one-off) strategic investment of €2.5 million in our fill & finish partner BioConnection, and the costs of capacity improvements. The net effect of investment and deleveraging resulted in a stable cash position to €65.3 million, down slightly from €66.5 million at 31 March 2019 (and €66.9 million at 30 June 2018).
- The equity position improved from €61.8 million at the end of December 2018 to €77.5 million at the end of the first half of 2019 (H1 2018: €39.8 million), reflecting the net result for the period.
- Right-of-use assets in the non-current assets section of the balance sheet, and lease liabilities under current and non-current liabilities, show the effects of new disclosures of items acquired under leases under the new financial standard IFRS 16. These changes have had no material net effect on operating results during the quarter.
- Other financial liabilities, which refers to the contingent consideration for the milestones, reflects the payment of the first successful sales performance milestone in March 2019 and the revised probability and timing for paying the last milestone. The next milestone will appear in current liabilities once it is certain of being incurred, which is expected to happen later this year.
- Since the last reporting date of 15 May 2019, the Company has issued or reserved for issue a total of 2,467,074 shares in connection with a number of exercises of options under the current schemes, and has committed a further 15,414,026 shares under the existing approved employee option and long term incentive plan programs. The number of issued shares as at 25 July 2019 is 626,798,839. The fully diluted number of shares as at 25 July 2019 is 681,535,016.
Sijmen de Vries, Chief Executive Officer, commented:
"We are pleased to report strong results today, demonstrating continued growth in a period of intense competition. Pharming's revenue and profit performance confirm our in-market strategy as we see continued growth from existing and new patients requesting or being prescribed RUCONEST® as their preferred breakthrough therapy as well as medication for acute hereditary angioedema (HAE) attacks. We expect this underlying demand for the product to continue to drive sales growth as we enter the second half of the year. As a result of this demand and the regular need to provide ad hoc supplies in various EU markets following temporary shortages of plasma derived products, we are now seeing short term pressure on supplies of product for the European market. This pressure will be eliminated upon validation of our new production facility, expected during Q1 next year. We are doing everything possible in the meantime to minimize this issue.
In addition, we are making good progress in our pipeline. Following approval from the Dutch investigating centre's ethics committee, we are working to commence our clinical study of the effects of our recombinant human C1 esterase inhibitor (RUCONEST®) in patients with pre-eclampsia.
We expect to initiate a second major clinical trial with RUCONEST® in the second half of the year to treat acute kidney injury in patients undergoing percutaneous coronary interventions accompanied by contrast-enhanced examinations. An announcement will be made once this study has been approved to begin by the relevant authorities.
While the solid growth performance of RUCONEST® in HAE is the engine room of Pharming's profitable underlying business, we see very large growth potential in these new indications, each of which addresses a separate currently-unmet medical need with sales potential well over $1 billion. Together with our next protein replacement therapy product for Pompe disease and a later one for Fabry disease, these offer prospects for a very bright future for Pharming and all its stakeholders."
For the remainder of 2019, the Company expects:
- Continued growth in revenues from sales of RUCONEST®, mainly driven by the USA and European operations.
- Maintenance of positive quarterly net earnings during the year.
- Continued investment in the expansion of production of RUCONEST® in order to ensure continuity of supply to the growing markets in the US, Europe, China and the Rest of the World.
- Investment in clinical trials for pre-eclampsia and acute kidney injury, and support for investigators wishing to explore additional indications for RUCONEST®
- Re-evaluation of the most advantageous new routes of administration while we focus on supplying all patients looking to receive RUCONEST® therapy.
- Investment in development of the new pipeline programs in Pompe disease and Fabry's disease, and purchase or license of other new development opportunities and assets.
- Increasing marketing activity where this can be profit-enhancing for Pharming.
- Supporting all our teams and marketing partners in order to enable the maximisation of the sales and distribution potential of RUCONEST® for patients in all territories.
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 distributed by Pharming in Austria, France, Germany, Luxembourg, the Netherlands, the United Kingdom and the United States of America. Pharming holds commercialisation rights in Algeria, Andorra, Bahrain, Belgium, Ireland, Jordan, Kuwait, Lebanon, Morocco, Oman, Portugal, Qatar, Syria, Spain, Switzerland, Tunisia, United Arab Emirates and Yemen. In some of these countries distribution is made in association with the HAEi Global Access Program (GAP).
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 Kamada.
RUCONEST® is also being examined for approval for the treatment of HAE in young children (2-13 years of age) and 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 will take place to global standards at CSIPI and are funded by CSIPI. Manufacturing for the Chinese market and to provide additional supply for Pharming will take place at CSIPI's affiliate, the Chengdu Institute of Biological Products Co. Ltd. Clinical development will be shared between the partners with each partner taking the costs for their territories under the partnership.
Additional information is available on the Pharming website: www.pharming.com
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 commercialise 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.
For further public information, contact
Sijmen de Vries, CEO: T: +31 71 524 7400
Robin Wright, CFO: T: +31 71 524 7432
Julia Phillips/ Victoria Foster Mitchell, T: +44 203 727 1136
LifeSpring Life Sciences Communication
Leon Melens, Tel: +31 6 53 81 64 27
Conference call information
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From the US: +1 6319131422
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Conference call PIN: 63072535#
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