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Thursday 16 May, 2019

Pharming Group N.v.

Pharming Group Reports Interim Financial


    Main results compared to Q1 2018 

<pre>    
    - 19.5% increase in revenues 
    - 49% increase in operating profit  
    - 23% increase in net profit 
</pre>    Pharming Group N.V. ("Pharming" or "the Company") (Euronext Amsterdam:
PHARM) presents
its (unaudited) interim financial report for the first quarter ended 31 March 
2019.  

    Financial highlights 

<pre>    
    - Revenues increased approximately 19.5% to EUR35.2 million, compared with 
EUR29.5
      million during the same period last year.  
    - US net product sales increased to EUR33.7 million (Q1 2018: EUR27.9 
million), an
      increase of 21% compared to the same period last year, and were similar to
the last
      quarter of 2018, reflecting the customary effect of calendar year patient
insurance
      renewals in the USA, consistent with prior years.  In Europe and the rest
of the world,
      product sales for the first three months of 2019 remained at EUR1.3 
million (Q1 2018:
      EUR1.3 million), mainly due to lower ordering by SOBI for certain Eastern
European
      markets balanced by growth for Pharming direct markets.
    - Operating profits rose by 49% to EUR12.2 million, compared to EUR8.2 
million in the
      same period last year, reflecting an improvement in gross margin and 
better cost
      controls as well as .
    - Net profit increased by 23% to EUR6.7 million, compared to EUR5.5 million
for Q1 2018
      after upward restatement of Q1 2018 by EUR2.2 million, despite a much 
higher tax
      charge for this quarter of EUR3.0 million (2018: EUR0.8 million). This tax
charge is
      covered by the tax losses capitalized in the deferred tax asset taken at 
the end of
      2018, and will not result in a cash payment.  The restatement of Q1 2018
arose from
      changes to the accounting in that quarter for redemption of the last of 
the Ordinary
      Bonds and the effective interest on the Orbimed loan, in order to reflect
the fees due
      on the quarterly repayments of this loan under financial income and 
expenses, as
      described more fully previously in the Annual Report 2018, and does not 
change the
      published 2018 accounts.
    - Positive cashflows during the quarter were driven by strong revenue 
despite
      intensified competition, generating almost EUR10 million cash above the 
cash required
      for operating costs. This was then reduced by the quarterly instalment of
EUR7.7
      million of the principal amount of the Company's outstanding loan 
including associated
      fees and the US$20 million (EUR17.5 million) sales performance milestone 
paid to
      Bausch Health Companies Inc. (formerly Valeant Pharmaceuticals 
International, Inc.).
       This resulted in a decrease in the cash position to EUR66.5 million from
EUR81.5
      million at 31 December 2018 (EUR59.8 million at 31 March 2018).
    - The equity position improved from EUR61.8 million at the end of December 
2018 to
      EUR69.1 million at the end of the first quarter of 2019 (Q1 2018: EUR31.6
million),
      reflecting the net result for the quarter.
    - Property plant and equipment in the non-current assets section of the 
balance sheet,
      and Finance lease liabilities under 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 milestone payment of $20 million (EUR17.5 million) does not appear 
in the income
      statement itself because the cost of the milestone is balanced by the 
release of the
      contingent consideration liability (also EUR17.5 million) shown in current
liabilities
      at the year end, after allowing for exchange rate differences.
    - Inventories changed from EUR17.3 million at the end of December 2018 to 
EUR13.6
      million at the end of the first quarter of 2019, mainly due to sales in 
the USA
      slightly exceeding commercial production in the first quarter and as some
production
      was diverted to provide clinical trial material for the pre-eclampsia 
study and other
      studies.
    - Since the last reporting date of 28 March 2019, the Company has issued a 
total of
      2,097,420 shares in connection with a number of exercises of options under
the current
      schemes. The number of issued shares as at 15 May 2019 is 624,331,765. 
 The fully
      diluted number of shares as at 15 May 2019 is 663,653,916.
</pre>    Operational highlights since the reporting date 

<pre>    
    - In April, following a preliminary announcement on 29 March 2019, Pharming
      completed its investment of EUR1.6 million in cash and conversion of 
EUR2.5 million of
      prepayments into new equity in its Fill &amp; Finish partner BioConnection
BV, which
      manufactures the sterile sealed vials of Pharming's product RUCONEST(R) 
from the
      purified drug substance.  Together with additional shares acquired from 
existing
      shareholders, this gives Pharming a significant minority stake in 
BioConnection.
       Other current shareholders of BioConnection also supported the company 
with
      additional investments. This investment was made to support BioConnection
to make
      capacity expansion investments which will benefit Pharming.  No further 
details were
      disclosed.
</pre>    Sijmen de Vries, Chief Executive Officer, commented: 

    "We are pleased to report strong results today in a period of intense 
competition.
Pharming's revenue and profit performance confirm the success of our in-market 
strategy
for RUCONEST(R) as we see continued growth in underlying demand for the product.
 

    Looking forward to the remainder of 2019, we therefore expect continued 
sales growth,
driven by increasing patient numbers and despite competitive pressure. 

    In addition, we continue to make good progress in our pipeline. Following 
ongoing
interaction with ethics committees in the Netherlands and Australia, we 
anticipate
receiving approval shortly to begin our clinical study in pre-eclampsia.  We 
also expect
to initiate a clinical trial with RUCONEST(R) in the second half of the year to
treat
acute kidney injury in patients undergoing percutaneous coronary interventions 
accompanied
by contrast-enhanced examinations." 

    Financial summary  
3 months to 31 March 

<pre> 
    Amounts in EURm except per share     2019         
 2018           %
    data                                
 1st Quarter   1st Quarter    Change
    Income Statement   
    Revenues                                
   35.2          29.5     19.5%
    Gross profit                             �
�  29.8          24.5       22% 
    Operating result                           
12.2           8.2       49% 
    Net result                              �
�    6.7          5.5*       23%
    Balance Sheet 
    Cash &amp; marketable securities           
     66.5          59.8       11%
    Share Information
    Earnings per share (EUR): -
    Undiluted                              
    0.011        0.009*       20%
    - Fully diluted                           
 0.010        0.008*       25%

    Amounts in EURm except per share     2019          2018           %
    data                                 1st Quarter   1st Quarter    Change
    Income Statement   
    Revenues                                    35.2          29.5     19.5%
    Gross profit                                29.8          24.5       22% 
    Operating result                            12.2           8.2       49% 
    Net result                                   6.7          5.5*       23%
    Balance Sheet 
    Cash &amp; marketable securities                66.5          59.8       11%
    Share Information
    Earnings per share (EUR): -
    Undiluted                                  0.011        0.009*       20%
    - Fully diluted                            0.010        0.008*       25%
    *  After restatement on the basis set out above and in Note 4 to the 
Financial
Statements in the Annual Report 2018. 

    Outlook 

    For the remainder of 2019, the Company expects:

    
    - Continued growth in revenues from sales of RUCONEST(R), 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(R) 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(R)
    - Investment in further clinical trial programs for RUCONEST(R) in acute 
treatment and
      prophylaxis of HAE, the development of a small intravenous liquid version
and new
      intramuscular, subcutaneous and intradermal versions of RUCONEST(R) as 
well as
      research into other routes of administration.
    - Investment in development of the new pipeline programs in Pompe disease 
and Fabry's
      disease, and other new development opportunities and assets as these 
occur.
    - 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(R) 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(R) (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(R) 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(R) 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(R) 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(R) 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:
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 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. 

    Pharming Group N.V. 

    Consolidated Interim Financial Statements (Unaudited)

    For the first three months ended 31 March 2019

    Consolidated statement of income

    Consolidated statement of comprehensive income

    Consolidated balance sheet

    Consolidated statement of cash flows

    Appendix: Main Financial Statements reported in US dollars 

(The appendix does not form part of the Consolidated Interim Financial 
Statements)

    Consolidated statement of income in US Dollars (unaudited)

    Consolidated balance sheet in US Dollars (unaudited)

    Consolidated statement of cash flows in US Dollars (unaudited)

    Consolidated Statement of Income                    

    For the first three months ended 31 March

    
                                                           YTD 2018
    Amounts in EUR'000, except per share data   YTD 2019  *restated
    Revenues                                      35,224     29,483
    Costs of sales                               (5,420)    (5,022)
    Gross profit                                  29,804     24,461
    Other income                                     281        149
    Research and development                     (5,305)    (5,737)
    General and administrative                   (2,968)    (2,463)
    Marketing and sales                          (9,568)    (8,205)
    Costs                                       (17,841)   (16,405)
    Operating result                              12,244      8,205
    Fair value gain (loss) on revaluation
    derivatives                                     (28)      (961)
    Other financial income and expenses*         (2,497)      (957)
    Financial income and expenses                (2,525)    (1,918)
    Result before income tax                       9,719      6,287
    Income tax expense                           (2,980)      (796)
    Net result for the period                      6,739      5,491
    Attributable to:
    Owners of the parent                           6,739      5,491
    Total net result                               6,739      5,491
    Basic earnings per share (EUR)                 0.011      0.009
    Fully-diluted earnings per share (EUR)         0.010      0.008
    *  After restatement of Q1 2018 to reflect changes to 2017 as set out in 
Note 4 to the
Financial Statements in the Annual Report 2018. 

    Consolidated Statement of Comprehensive Income  

    For the first three months ended 31 March

    
                                                        YTD 2018
    Amounts in EUR'000                      YTD 2019  *restated
    Net result for the period                  6,739       5,491
    Currency translation differences           (304)     (1,423)
    Items that may be subsequently
    reclassified to profit or loss             (304)     (1,423)
    Other comprehensive
    income/(expenses), net of tax              (304)     (1,423)
    Total comprehensive income for the
    period                                     6,435       4,068
    Attributable to:
    Owners of the parent                       6,435       4,068
    *  After restatement of Q1 2018 to reflect changes to 2017 as set out in 
Note 4 to the
Financial Statements in the Annual Report 2018. 

    Consolidated Balance Sheet  

    As at date shown    

    
    Amounts in EUR'000                31 March     31 December 
                                          2019            2018
    Intangible assets                   52,062          52,435
    Property, plant and equipment       12,167           8,402
    Long term prepayments                    -           2,006
    Deferred tax asset                  32,417          35,082
    Restricted cash                      1,225           1,204
    Non-current assets                  97,871          99,129
    Inventories                         13,642          17,315
    Trade and other receivables         22,783          17,814
    Cash and cash equivalents           65,264          80,311
    Current assets                     101,689         115,440
    Total assets                       199,560         214,569
    Share capital                        6,222           6,215
    Share premium                      387,956         387,525
    Legal reserves                       1,540           1,647
    Accumulated deficit              (326,651)       (333,636)
    Shareholders' equity                69,067          61,751
    Loans and borrowings                31,946          37,267
    Deferred tax liabilities                62              87
    Contract liabilities                   467             667
    Finance lease liabilities            4,293             164
    Other financial liabilities         31,456          32,034
    Non-current liabilities             68,224          70,219
    Loans and borrowings                34,963          35,235
    Contract liabilities                   800             800
    Derivative financial liabilities       147             228
    Trade and other payables            26,096          28,589
    Finance lease liabilities              263             263
    Other financial liabilities              -          17,484
    Current liabilities                 62,269          82,599
    Total equity and liabilities       199,560         214,569
    Consolidated Statement of Cash Flows 

    For the first three months ended 31 March

    
                                                                 
    Amounts in EUR'000                                   YTD 2019     YTD 2018
    Operating result                                       12,244        8,205
    Non-cash adjustments:
    Depreciation, amortization                              1,353          944
    Accrued employee benefits                                 541          458
    Release of contract liabilities                         (200)        (202)
    Operating cash flows before changes in working
    capital                                                13,938        9,405
    Changes in working capital:
    Inventories                                             3,673      (3,277)
    Trade and other receivables                           (4,969)      (3,110)
    Payables and other current liabilities                (2,833)      (4,684)
    Total changes in working capital                      (4,129)     (11,071)
    Changes in non-current assets, liabilities and
    equity                                                      3          705
    Cash generated from (used in) operations before
    interest and taxes                                      9,812        (961)
    Interest received                                         165            -
    Net cash flows generated from (used in) operating
    activities                                              9,977        (961)
    Capital expenditure for property, plant and
    equipment                                               (229)        (517)
    Investment in intangible assets                         (114)        (353)
    Net cash flows used in investing activities             (343)        (870)
    Repayments of loans and borrowings                      7,728            -
    Payments of contingent consideration                 (17,635)            -
    Redemption of bonds                                         -      (2,238)
    Interest on loans                                     (2,510)      (2,592)
    Interest on finance lease liabilities                   (117)            -
    Payment of lease liabilities                            (262)
    Proceeds of equity and warrants                           228        6,556
    Net cash flows generated from (used in) financing
    activities                                           (28,024)        1,726
    Increase (decrease) of cash                          (18,390)        (105)
    Exchange rate effects                                   3,364        (127)
    Cash and cash equivalents at 1 January                 81,515       59,993
    Total cash and cash equivalents at 31 March            66,489       59,761

Appendix: Main Financial Statements reported in US dollars

    The original Financial Statements are reported in Euros. In case of 
differences of
interpretation between the Financial Statements in US Dollars and the Financial
Statements
in Euros, the Financial Statements in Euros will prevail. 

    Principal exchange rate used for the income statement: EUR1 = $1.1404 

    Principal period end exchange rate used for the balance sheet EUR1 = 
$1.1214 

    Consolidated Statement of Income in US Dollars                

    For the first three months ended 31 March

    
    Amounts in US$'000, except per share data   YTD 2019   YTD 2018  
    Revenues                                      40,159     36,182
    Costs of sales                               (6,179)    (6,163)
    Gross profit                                  33,980     30,019
    Other income                                     320        183
    Research and development                     (6,048)    (7,040)
    General and administrative                   (3,384)    (3,023)
    Marketing and sales                         (10,908)   (10,069)
    Costs                                       (20,341)   (20,132)
    Operating result                              13,959     10,069
    Fair value gain (loss) on revaluation
    derivatives                                     (32)    (1,179)
    Other financial income and expenses          (2,721)    (1,174)
    Financial income and expenses                (2,753)    (2,354)
    Result before income tax                      11,206      7,715
    Income tax expense                           (3,397)      (977)
    Net result for the period                      7,809      6,739
    Attributable to:
    Owners of the parent                           7,809      6,739
    Total net result                               7,809      6,739
    Basic earnings per share ($)                   0.012      0.011
    Fully-diluted earnings per share ($)           0.011      0.010
    *  After restatement of Q1 2018 to reflect changes to 2017 as set out in 
Note 4 to the
Financial Statements in the Annual Report 2018. 

    Consolidated Balance Sheet in US Dollars 

    As at date shown    

    
    Amounts in US$'000                31 March     31 December 
                                          2019            2018
    Intangible assets                   58,353          59,980
    Property, plant and equipment       13,644           9,611
    Long term prepayments                    -           2,295
    Deferred tax asset                  36,352          40,130
    Restricted cash                      1,374           1,377
    Non-current assets                 109,753         113,394
    Inventories                         15,298          19,807
    Trade and other receivables         25,549          20,377
    Cash and cash equivalents           73,187          91,868
    Current assets                     114,034         132,052
    Total assets                       223,787         245,445
    Share capital                        6,977           7,109
    Share premium                      435,054         443,290
    Legal reserves                       1,727           1,884
    Accumulated deficit              (366,306)       (381,646)
    Shareholders' equity                77,452          70,637
    Loans and borrowings                35,824          42,630
    Deferred tax liabilities                70             100
    Contract liabilities                   524             763
    Finance lease liabilities            4,814             188
    Other financial liabilities         35,275          36,644
    Non-current liabilities             76,507          80,324
    Loans and borrowings                39,208          40,305
    Contract liabilities                   897             915
    Derivative financial liabilities       165             261
    Trade and other payables            29,263          32,703
    Finance lease liabilities              295             301
    Other financial liabilities              -          20,000
    Current liabilities                 69,828          94,485
    Total equity and liabilities       223,787         245,445
    Consolidated Statement of Cash Flows in US Dollars 

    For the first three months ended 31 March

    
    Amounts in US$'000                                    YTD 2019      YTD 2018
    Operating result                                        13,959        10,069
    Non-cash adjustments:
    Depreciation, amortization                               1,543         1,158
    Accrued employee benefits                                  617           562
    Release of contract liabilities                          (228)         (248)
    Operating cash flows before changes in working
    capital                                                 15,891        11,542
    Changes in working capital:
    Inventories                                              4,188       (4,022)
    Trade and other receivables                            (5,665)       (3,817)
    Payables and other current liabilities                 (3,230)       (5,748)
    Total changes in working capital                       (4,707)      (13,586)
    Changes in non-current assets, 
    liabilities and equity                                       3           865
    Cash generated from (used in) 
    operations before
    interest and taxes                                      11,187       (1,179)
    Interest received                                          188             -
    Net cash flows generated from 
    (used in) operating
    activities                                              11,375        
(1,179)
    Capital expenditure for property, 
    plant and equipment                                      (261)          
(634)
    Investment in intangible assets                          (130)          
(433)
    Net cash flows used in 
    investing activities                                     (391)        
(1,068)
    Repayments of loans and borrowings                     (8,811)             
-
    Payments of contingent consideration                  (20,106)             
-
    Redemption of bonds                                          -        
(2,746)
    Interest on loans                                      (2,862)        
(3,181)
    Interest on finance lease liabilities                    (133)             
-
    Payment of lease liabilities                             (299)
    Proceeds of equity and warrants                            260          
8,046
    Net cash flows generated from 
    (used in) financing activities                        (31,950)          
2,118
    Increase (decrease) of cash                           (20,966)          
(129)
    Exchange rate effects                                    2,282          
1,935
    Cash and cash equivalents at 1 January                  93,245         
71,854
    Total cash and cash equivalents at 31 March             74,561         
73,660
    For further public information, contact:
Sijmen de Vries, CEO: T: +31-71-524-7400  
Robin Wright, CFO: T: +31-71-524-7432   

FTI Consulting   
Julia Phillips/ Victoria Foster Mitchell, T: +44-203-727-1136  

LifeSpring Life Sciences Communication   
Leon Melens, Tel: +31-6-53-81-64-27


Pharming Group N.V.</pre>
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