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