Pharming Group Reports on Preliminary Financial Results 2012
Published: Mar 07, 2013
LEIDEN, NETHERLANDS--(Marketwire - March 07, 2013) - Biotech company Pharming Group NV ("Pharming" or "the Company") (NYSE Euronext: PHARM) today published its preliminary (unaudited) financial results for the year ended December 31, 2012.
* Revenues and other income increased to EUR10.9 million (2011: EUR3.2 million) following the Q4 2012 receipt of US$10.0 million (EUR7.9 million) from our US partner Santarus in relation to the successful completion of Study 1310 for Ruconest®.
* Operating costs from continuing operations increased to EUR24.1 million (2011: EUR18.2 million).
* Total net loss from continuing operations increased to EUR24.1 million (2011: EUR17.8 million) mainly as a result of non-cash charges, such as EUR5.8 million in costs associated with financing activities and impairment charges of EUR1.2 million in relation to the closure of the US-based cattle operations.
* Net cash outflows from operations decreased to EUR10.3 million (2011: EUR16.9 million) with net cash inflows from financing activities amounting to EUR11.6 million (including EUR8.0 million in relation to the issue of convertible bonds) and net cash inflows from investing activities amounting to EUR0.1 million (EUR0.7 million in cash was received due to sale of the US- based cattle operations, which offset investment payments of EUR0.6 million).
* Cash at the end of 2012 increased to EUR6.3 million (2011: EUR5.1 million). The negative equity position of EUR1.2 million at year end 2011 increased to a negative equity position of EUR7.7 million.
* Successful completion of the Ruconest US Phase III pivotal study (Study 1310) followed by receipt of an associated US$10.0 million milestone payment from our US partner Santarus.
* Ruconest continues roll-out across Europe: * Roll-out progressing slower than expected as a result of challenging market access conditions in the EU during 2012. * To address these issues, our partner Sobi has recently re-aligned their commercial organisation and have initiated specific in-market actions.
* First production validation runs completed and initiation of the certification process with the European Medicines Agency (EMA) and Food and Drug Authority (FDA) for new downstream manufacturing site for Ruconest, which will enable significant future reductions in the cost of manufacturing.
* Restructuring to reduce cash-burn initiated in the second half of 2012; sale of the US facility and the downsizing of the Netherlands organization. The latter is expected to be completed in the first half of 2013.
* New positive data published showing that Ruconest was not observed to have a prothrombotic effect when used to treat acute HAE attacks * study published by Relan et al in the peer-reviewed journal Biodrugs * competitive drugs have shown to be prothrombotic
* Expansion of the geographical coverage for Ruconest through new agreements with Singapore based Transmedic Pte for Brunei, Indonesia, Malaysia, Philippines, Singapore, as well as Thailand and Seoul based Hypjin Corp for South Korea.
* Initiated an open-label Phase II clinical study evaluating Ruconest for the treatment of acute attacks of angioedema in paediatric patients with HAE.
* Data published showing that Ruconest has a protective effect in a preclinical animal model of severe blood loss designed to simulate battlefield injuries.
Sijmen de Vries, CEO, commented: "2012 was a challenging and volatile year for Pharming, largely due to an unforeseen delay in Study 1310 which negatively impacted on our cash resources. However, this early challenge was followed by the arrangement of an Equity Working Capital Facility for financing and the successful completion of Study 1310, which triggered the payment of a US$10.0 million milestone by our US partner Santarus. This in turn provided the platform for the January 2013 EUR16.35 million financing, by means of a short term convertible bond, and hence a strong ending to the year. In sharp contrast to only some months ago, Pharming is now well prepared and funded to enter the US regulatory review process for the treatment of acute HAE with Ruconest. Furthermore, in the second half of the year, assuming that the Ruconest BLA will have been accepted for review, together with our US partner Santarus we plan to request separate meetings with the FDA to discuss the pathway for other potential indications for Ruconest such as the treatment of acute pancreatitis and the prophylactic treatment of HAE. As we near potential approval and a subsequent launch for Ruconest in the US, the world's largest pharmaceutical market, Pharming is in a strong position to capitalise on this significant commercial opportunity."
In the year 2012 the Company generated revenue from continuing operations of EUR10.6 million (2011: EUR3.0 million). This increase stems from the Q4 2012 receipt of US$10.0 million (EUR7.9 million) from our US partner Santarus in relation to successful completion of Study 1310. Costs of revenues amounted to EUR4.3 million (2011: EUR3.5 million) with impairments on inventories previously reserved for sales amounting to EUR3.1 million (2011: EUR1.7 million). Other income related to grants exclusively and increased from EUR0.2 million in 2011 to EUR0.3 million in 2012.
Total operating costs from continuing operations increased by EUR5.9 million from EUR18.2 million in 2011 to EUR24.1 million in the same period of 2012. The increase in part reflects items such as impairment charges related to the US-based cattle platform operations (EUR1.2 million), a restructuring provision expense in relation to the Dutch operations and the US-based cattle platform operations (EUR1.4 million) as well as the Company's activities in relation to Study 1310 required for US regulatory approval for Ruconest.
Early in 2012 the Company finalized a transaction announced in December 2011 under which it issued EUR8.4 million convertible bonds plus 38,717,484 warrants. The bonds had to be repaid in six monthly installments and could be settled in cash and/or in shares. The bonds have been fully repaid in 2012; all installments plus interest were in shares with the number of shares based on volume weighted average price, a reference period minus a discount. With regard to these pay-backs, the Company issued a total of 210,181,995 shares. Total non- cash costs associated with these bonds amounted to EUR5.1 million, which in addition to the one-time recycling expense of an equity translation reserve of EUR1.4 million and EUR1.3 million profit posted on financial derivatives and various other expense items totaling EUR1.4 million, accounted for a net loss on financial income and expenses of EUR6.6 million as compared to a EUR0.7 million net profit on financial income and expenses in 2011.
As a result of the above items, the net loss from continuing operations increased by EUR6.3 million to EUR24.1 million in 2012 (2011: EUR17.8 million). Due to a one-time EUR0.6 million profit on discontinued operations in 2011, total net loss increased from EUR17.2 million to EUR24.1 million. The net loss per share for 2012 amounted to EUR0.03 (2011: EUR0.04).
Total cash and cash equivalents (including restricted cash) increased by EUR1.2 million from EUR5.1 million at year end 2011 to EUR6.3 million at the end of 2012. The increase follows from net cash outflows from operations of EUR10.3 million with net cash inflows from financing activities amounting to EUR11.6 million and net cash inflows from investing activities amounting to EUR0.1 million. Net cash flows used in operating activities decreased from EUR16.9 million in 2011 to EUR10.3 million in 2012, which largely reflects receipt of US$10.0 million from our US partner Santarus following the successful completion of Study 1310.
Financing cash flows followed the early 2012 issue of convertible bonds which raised EUR8.0 million in cash (fully repaid in 210,181,995 shares in 2012), EUR4.9 million through the issue of 258,768,453 shares under a EUR10.0 million equity working capital facility concluded in August 2012 and EUR0.4 million through the issue of 24,051,258 shares following the exercise of warrants; financing cash outflows of EUR1.8 million in 2012 related to finance lease payments and costs associated with the issue of convertible bonds and shares. Investing cash flows included EUR0.6 million in payments related to investments; these were offset with EUR0.7 million received in relation to the closure and subsequent sale of the US- based cattle operations.
Pharming continues to seek improvement in its financial position and at December 31, 2012 had a remaining amount available under the EUR10.0 million equity working capital facility of EUR5.1 million. In January 2013 the Company announced it had entered into a EUR16.35 million convertible bond agreement (net proceeds of EUR15.3 million); the transaction was subject to shareholder approval, which was obtained at the Extraordinary General Meeting of Shareholders held on February 28, 2013.
In addition, the Company anticipates receiving US$5.0 million from Santarus when the US Food and Drug Administration accepts the BLA filing for review. Receipt of this milestone is expected to further improve the Company's cash and equity position.
In December 2011 the Company announced that it had entered negative equity. This negative equity position of EUR1.2 million at year end 2011 increased by EUR6.5 million to EUR7.7 million and mainly reflects the EUR24.1 million net loss for the year 2012, net of EUR12.5 million posted for shares issued as a repayment of convertible bonds (EUR9.9 million), shares issued in relation to the equity working capital facility (EUR4.7 million), shares issued in relation to the exercise of warrants (EUR0.9 million) and other payments in shares (EUR0.3 million). In addition, following the closure of the US-based cattle platform operations Pharming restated a negative equity translation reserve of EUR1.4 million to the statement of income; this restatement impacted the EUR24.1 million net loss for the year 2012 but in itself did not affect equity.
The negative equity position has in itself no immediate impact on the execution of Pharming's business plan, nor does it imply that the Company is legally required to issue new share capital. However, the Company is considering various options in order to reduce the negative equity and return to a positive equity position.
Pharming is continuously reviewing its financial and liquidity position and has various options to improve its equity standing under International Financial Reporting Standards (IFRS). Notably, the Company reports that the negative equity position was mainly caused by the inability to recognize the EUR19.7 million upfront payments and milestones received from Sobi and Santarus as equity (at December 31, 2012 the deferred license fees income amounted to EUR15.4 million; if release to the statement of income would have been permitted under IFRS, the Company would have reported a positive equity position of EUR7.7 million). Anticipated receipt of the development milestone associated with the acceptance of the BLA filing by the FDA (US$5.0 million) will, under IFRS, be recognized immediately and thus augment the equity position.
Conference call information
Today, Chief Executive Officer Sijmen de Vries will discuss the full year 2012 results in a conference call at 10:00am (CET). To participate, please call one of the following numbers 10 minutes prior to the call:
From the Netherlands: 31 (0) 45 631 6902
From the UK: 44 (0) 207 153 2027
About Pharming Group N.V.
Pharming Group N.V. is developing innovative products for the treatment of unmet medical needs. RUCONEST® is a recombinant human C1 inhibitor approved for the treatment of angioedema attacks in patients with HAE in all 27 EU countries plus Norway, Iceland and Liechtenstein, and is distributed in the EU by Swedish Orphan Biovitrum. RUCONEST® is partnered with Santarus Inc (NASDAQ: SNTS) in North America where the drug has completed Phase III clinical development. The product is also being evaluated for various follow-on indications. Pharming has a unique GMP compliant, validated rabbit platform for the production of recombinant human proteins that, with the EU approval of Pharming's rhC1 inhibitor, has proven capable of producing industrial volumes of high quality recombinant human protein in a significantly more economical way through low upfront capital investment and manufacturing costs, compared to current cell based technologies. Pharming now plans to utilise this platform for the development of rhFVIII for the treatment of Haemophilia A.
Additional information is available on the Pharming website, www.pharming.com.
This press release contains forward looking statements that involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from the results, performance or achievements expressed or implied by these forward looking statements.
The full report including tables can be downloaded from the following link:
Q4 Report 2012:
This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Pharming Group N.V. via Thomson Reuters ONE
Sijmen de Vries
T: +31 (0)71 524 7400
Julia Phillips/John Dineen
T: +44 (0)207 269 7193