Leiden, The Netherlands, October 21, 2010. Biotech company Pharming Group NV (“Pharming” or “the Company”) (NYSE Euronext: PHARM) today published its financial report for the nine month period ended September 30, 2010.
FINANCIAL HIGHLIGHTS FIRST NINE MONTHS
- Income from grants and license fees for the nine month period of €0.7 million (9M 2009: €0.5 million)
- Received US$15.0 million (€11.7 million) upfront payment from Santarus for the commercialization of Rhucin® in North America
- Received € 3.0 million upfront payment from SOBI for commercialization of Ruconest in the EU
- Significant decrease in operating cash outflows (€3.4 million in first nine months of this year compared to €18.4 million in the same period 2009)
- Operating loss of €18.3 million (9M 2009: €21.0 million)
- Cash at September 30, 2010 of €17.0 million
- Bondholders converted all of the €7.5 million bonds issued in January 2010
OPERATIONAL HIGHLIGHTS IN THIRD QUARTER
- Agreement entered with Santarus for the commercialization of Rhucin in North America
- Signed manufacturing agreement with Sanofi Chimie for the drug substance of Ruconest™
- Dr Karl Keegan joined the Company as Chief Financial Officer (CFO)
- Intention to submit BLA to the FDA to obtain US marketing approval for Rhucin announced
- Spin off of DNage successfully completed
SUBSEQUENT TO SEPTEMBER 30, 2010
- Shareholders approved appointment Dr Keegan as CFO and member of Pharming’s Management Board
- Shareholders also approved increase of the authorized share capital at Company’s EGM
- Published peer reviewed randomized clinical trial results with recombinant human C1 esterase inhibitor in Journal of Allergy and Clinical Immunology
- Anticipated exercise of the put option by the 2007 public bondholders to repay the remaining outstanding 2007 convertible bonds per 31 October 2010 was confirmed
Sijmen de Vries, CEO, commented: “The first nine months of 2010 have been an important period for Pharming, during which we have consistently delivered on our stated targets of progressing our lead asset through the requisite developmental and regulatory pathways and maintaining tight control of our cost base. We believe that the progress we have made during the period is an endorsement of management’s strategic focus. We look forward to working with our marketing partners towards the first commercial launch of our lead program, an historic point in Pharming’s history and an important step towards bringing the Company to financial stability.”
FINANCIAL HIGHLIGHTS FIRST NINE MONTHS Pharming’s income from grants and license fees were €0.7 million for the nine month period ended September 30, 2010. In the same period of 2009, Pharming recognized €0.5 million.
Operating loss decreased to €18.3 million from the €21.0 million recorded for the corresponding period in 2009. The decrease is mainly a result of timing of (pre)clinical and regulatory activities, our continued strong focus on cost savings and control, as well as the implementation of a strategic focus of our business resulting in the spin out of DNage. In the nine month period, operating losses attributable to DNage were approximately €2.0 million compared to €2.8 million in the first three quarters of 2009. General and administrative costs remained broadly constant but R&D expenses declined by €4.5 million in the nine month period 2010 compared to the corresponding period in 2009.
In the nine month period to September 30, 2010, Pharming recorded a net loss of €34.6 million compared to a net loss of €23.1 million for the same period in 2009. The vast majority of this loss was attributable to financing measures and their consequences that were triggered by financing activities during 2010. The net loss per share was €0.15 for the first nine months of 2010 compared to €0.22 in the first nine months of 2009. At the end of the period, the number of shares outstanding was 358,800,199 compared to 120,850,520 at the end of the corresponding period in 2009.
The increase in the current number shares by 3,018,702 from 355,781,497 on September 2, 2010 results from 2,171,117 shares in relation to exercise of cashless warrants and 847,585 shares issued to the Board of Management and various employees in settlement of bonuses due.
Pharming ended the nine month period with a cash position of €17.0 million, compared to a €10.6 million cash balance on September 30, 2009 and €2.3 million on December 31, 2009.
Pharming has recorded a significant decrease in operating cash outflows (€3.4 million in first nine months of this year compared to €18.4 million in the same period 2009). This achievement is primarily related to the receipt of upfront cash payments from SOBI and Santarus. The US$15.0 million (€11.7 million) non refundable and non off-settable upfront payment from Santarus is detailed in the consolidated statement of cash flows for the third quarter. The €3.0 million upfront from SOBI was recognized similarly in Q2 2010. In accordance with International Financial Reporting Standards, Pharming will recognize these upfront payments in the consolidated statement of income from Q4 2010 onwards as the amount received spread evenly over a period of approximately 10 years.
OPERATIONAL HIGHLIGHTS IN THIRD QUARTER Pharming entered into an agreement with specialty biopharmaceutical company Santarus, Inc for the commercialization of Rhucin in North America (the United States, Canada and Mexico) for the treatment of acute attacks in HAE patients and other future indications.
Pharming signed a manufacturing agreement with Sanofi Chimie, wholly owned subsidiary of sanofi-aventis to increase the production capacity of the drug substance of Ruconest. This will improve Ruconest cost of goods and competitiveness and will put Pharming in the position to satisfy future global demand.
Pharming announced that it intends to submit the Biologic License Application to the FDA to obtain marketing approval for Rhucin for the treatment of acute angioedema attacks in patients with HAE. Following pre-BLA discussions with the FDA, Pharming is preparing the BLA dossier for submission towards the end of this year but no later than January 2011.
The spin off of DNage was completed and all earn-out liabilities due by Pharming to former DNage shareholders were fully settled.
SUBSEQUENT TO SEPTEMBER 30, 2010 Dr Karl Keegan was appointed to the role of CFO and member of Pharming’s Board of Management. Also, the increase of the authorized share capital from 400 million to 500 million shares was confirmed. These decisions were taken by the Shareholders at an Extraordinary General Meeting held on 1 October 2010.
The publication of the integrated analysis of Pharming’s randomized placebo-controlled clinical trials with recombinant human C1 esterase inhibitor for treatment of acute angioedema attacks in HAE patients in the October issue of the peer-reviewed Journal of Allergy and Clinical Immunology. PHARMING
The anticipated exercise of the put option by the 2007 public bondholders to repay the remaining outstanding 2007 convertible bonds per October, 31, 2010 was confirmed.
OUTLOOK Q4 2010 AND BEYOND
Ruconest in Europe
Following the positive opinion on the Marketing Authorization Application for Ruconest earlier this year, Pharming is anticipating the Market Authorization by the European Commission within the next few weeks. As stated previously, the main focus in Q4 2010 will continue to be on the market launch of Ruconest, which is on track. This pivotal event in Pharming’s evolution will be marked by an associated milestone payment from SOBI upon European Market Authorization.
DNage We have performed an impairment review on the intangible assets and goodwill capitalized with respect to DNage, which as previously announced is seeking additional funding through a combination of investors and government support.
Given that these financing activities are ongoing and given the uncertainty on the valuation ascribed to DNage by third party investors in any such financing, we have impaired the carrying value of goodwill associated with DNage in the balance sheet. This leads us to include a non cash impairment charge in the Q3 2010 financial statements.
Finances
As announced to the market, the Company has received confirmation of the put option from the bond holders. Thus, repayment of the remaining outstanding 2007 convertible bonds in cash and accrued interest (€11.3 million on aggregate) will occur by October 31, 2010. Pharming anticipates further cost savings from finalizing regulatory EU and US submission activities, co-funding development of rhC1INH for additional indications and further streamlining of the organization.
LIST OF USED ABBREVIATIONS AND TERMS
BLA Biological License Application
DNage DNage BV (Pharming has 51% stake)
EGM Extraordinary General Meeting of Shareholders held on 1 October 2010
FDA US Food and Drug Administration
HAE Hereditary Angioedema
rhC1INH Pharming’s recombinant human C1 esterase inhibitor Rhucin® Registered name in non-European countries for recombinant human C1 esterase inhibitor or rhC1INH for treatment of acute attacks of HAE Ruconest™ Trademark for European marketing of recombinant human C1 inhibitor for treatment of acute attacks of HAE Sanofi Chimie Wholly owned subsidiary of sanofi-aventis (NYSE Euronext: SAN, NYSE: SNY) Santarus Specialty biopharmaceutical company Santarus, Inc (NASDAQ: SNTS) SOBI Specialty pharmaceutical company Swedish Orphan Biovitrum (STO: BVT)
About Pharming Group NV
Pharming Group NV is developing innovative products for the treatment of genetic disorders, specialty products for surgical indications, and nutritional products. On June 24, the European Medicines Agency adopted a positive opinion for Ruconest™ (Rhucin® in non-EU territories) for the treatment of angioedema attacks. Market Authorization in the European Economic Area is therefore expected imminently with an anticipated market launch in the fourth quarter 2010. The product is also under development for follow-on indications, i.e. antibody-mediated rejection (AMR) and delayed graft function (DGF) following kidney transplantation. The advanced technologies of the Company include innovative platforms for the production of protein therapeutics, technology and processes for the purification and formulation of these products. 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.
Contact: Marjolein van Helmond, T: +31 (0)71 52 47 431 or +31 (0)6 109 299 54PHARMING
CONSOLIDATED STATEMENT OF FINANCIAL POSITION At September 30, 2010 (amounts in €’000) (unaudited)
September 30, 2010 December 31, 2009
Goodwill 1,479 4,312 Intangible assets 17,895 17,585 Property, plant and equipment 5,413 5,240 Restricted cash 176 176 Non-current assets 24,963 27,313
Inventories 11,188 11,255 Other current assets 1,403 1,392 Cash and cash equivalents 16,801 15,923 Current assets 29,392 28,570
Total assets 54,355 55,883
Share capital 14,352 77,251 Share premium 212,450 187,708 Other reserves (214,494) (251,646) Shareholders’ equity 12,308 13,313 Non-controlling interest 5,628 - Equity 17,936 13,313
Deferred license fee income 13,284 - Deferred tax liability 4,276 4,276 Earn-out obligations - 1,788 Other 181 236 Non-current liabilities 17,741 6,300
Bank overdrafts - 13,761 Convertible bonds 11,115 9,461 Derivative financial liability 573 - Trade and other payables 5,579 8,840 Deferred license fee income 1,411 - Earn-out obligations - 4,208 Current liabilities 18,678 36,270
Total equity and liabilities 54,355 55,883
CONSOLIDATED STATEMENT OF INCOME For the nine months ended September 30, 2010 (amounts in €’000, except per share data) (unaudited)
Three months ended September 30, Nine months ended September 30, 2010 2009 2010 2009
Grants and other income 265 183 670 531
Research and development 3,769 5,720 13,825 18,300 General and administrative 744 934 2,557 2,692 Impairment charges 2,104 - 2,104 - Share-based compensation 187 210 450 542 Costs 6,804 6,864 18,936 21,534
Loss from operating activities (6,539) (6,681) (18,266) (21,003)
Financial income - 534 - 4,010 Financial expenses (79) (1,864) (16,341) (5,780) Financial income and expenses (79) (1,330) (16,341) (1,770)
Income taxes - - - (336)
Net loss (6,618) (8,011) (34,607) (23,109)
Attributable to: Equity holders of the parent (6,477) (8,011) (34,466) (23,109) Minority interest (141) - (141) -
Share information: Basic and diluted net loss per share (€) (0.02) (0.07) (0.15) (0.22) Weighted average shares outstanding 335,718,662 114,124,606 230,548,548 104,852,076
CONSOLIDATED STATEMENT OF CASH FLOWS For the nine months ended September 30, 2010 (amounts in €’000) (unaudited)
September 30, 2010 September 30, 2009
Payments of third party fees and expenses, including Value Added Tax (14,686) (15,275) Net compensation paid to board members and employees (2,896) (2,919) Payments of pension premiums, payroll taxes and social securities, net of grants settled
(2,281)
(2,404) Other payments (335) (666) License fees received 14,977 50 Receipt of Value Added Tax 1,206 1,626 Interest received from cash and marketable securities 6 564 Receipt of grants 345 231 Other receipts 298 397 Net cash flows used in operating activities (3,366) (18,396)
Purchase of property, plant and equipment (680) (313) Net cash flows used in investing activities (680) (313)
Net proceeds of increase of share capital 13,410 7,230 Proceeds convertible bonds issued 7,500 - Payments of transaction fees and expenses (1,081) - Payments of convertible bonds at nominal value - (1,010) Interest payments convertible bonds (375) (1,553) Payments of other financial liabilities (36) (69) Net cash flows from financing activities 19,418 4,598
Net increase/(decrease) cash and cash equivalents 15,372 (14,111)
Net cash and cash equivalents at January 1 2,338 19,786 Exchange rate effect (733) 224 Net increase/(decrease) cash and cash equivalents 15,372 (14,111) Net cash and cash equivalents at September 30 16,977 5,899
Liquidity information Restricted cash 176 176 Cash and cash equivalents 16,801 15,712 Bank overdrafts - (9,989) Net cash and cash equivalents at September 30 16,977 5,899 Marketable securities at September 30 - 4,661 Total liquidities at September 30 16,977 10,560
