Pharming Group Reports Interim Financial Results for the First Quarter of 2019

Date : 05/16/2019 @ 6:00AM
Source : PR Newswire (US)

Pharming Group Reports Interim Financial Results for the First Quarter of 2019

Pharming Grp. Nv (AMEX:E\PHARMA)
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LEIDEN, Netherlands, May 16, 2019 /PRNewswire/ --

Main results compared to Q1 2018 

  • 19.5% increase in revenues 
  • 49% increase in operating profit  
  • 23% increase in net profit 

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 

  • Revenues increased approximately 19.5% to €35.2 million, compared with €29.5 million during the same period last year.  
  • US net product sales increased to €33.7 million (Q1 2018: €27.9 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 €1.3 million (Q1 2018: €1.3 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 €12.2 million, compared to €8.2 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 €6.7 million, compared to €5.5 million for Q1 2018 after upward restatement of Q1 2018 by €2.2 million, despite a much higher tax charge for this quarter of €3.0 million (2018: €0.8 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 €10 million cash 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 US$20 million (€17.5 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 €66.5 million from €81.5 million at 31 December 2018 (€59.8 million at 31 March 2018).
  • The equity position improved from €61.8 million at the end of December 2018 to €69.1 million at the end of the first quarter of 2019 (Q1 2018: €31.6 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 (€17.5 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 €17.5 million) shown in current liabilities at the year end, after allowing for exchange rate differences.
  • Inventories changed from €17.3 million at the end of December 2018 to €13.6 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.

Operational highlights since the reporting date 

  • In April, following a preliminary announcement on 29 March 2019, Pharming completed its investment of €1.6 million in cash and conversion of €2.5 million of prepayments into new equity in its Fill & Finish partner BioConnection BV, which manufactures the sterile sealed vials of Pharming's product RUCONEST® 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.

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® 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® 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 

                                           

    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 & 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®, 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®
  • Investment in further clinical trial programs for RUCONEST® in acute treatment and prophylaxis of HAE, the development of a small intravenous liquid version and new intramuscular, subcutaneous and intradermal versions of RUCONEST® 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® 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: 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: €1 = $1.1404 

Principal period end exchange rate used for the balance sheet €1 = $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

Copyright 2019 PR Newswire

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