Leiden, The Netherlands, 30 October 2014. Biotech company Pharming Group NV (“Pharming” or “the Company”) (NYSE Euronext: PHARM) today published its financial report for the nine months ended 30 September 2014.
FINANCIAL HIGHLIGHTS
• Revenues from product sales increased to €2.2 million, as a result of underlying demand in the EU markets (9M 2013: €0.6 million).
• Revenues from license fees decreased to €1.6 million (9M 2013: €5.4 million) due to the receipt of a US$5 million milestone in 2013.
• Operating costs increased by €1.6 million to €10.9 million (9M 2013: €9.3 million) mainly as a result of increasing activities, including the start of a Phase II clinical study of Ruconest® for prophylaxis for HAE, and the expenses of the (non-cash) share-based compensation
• Net financial expenses amounted to €9.2 million (9M 2013: €7.4 million). The increase is due to the (non-cash) revaluation of our warrants resulting from the strong increase in our share price during 9M 2014.
• Loss from operating activities increased by €6.0 million to €9.7 million, as a result of the receipt of a US$5 million milestone payment in 2013, the increase of operating costs of €1.6 million and a €0.5 million impairment on inventory, reflecting the current low yield on EU sales.
• Total net loss increased by €7.8 million to €18.9 million (9M 2013: €11.1 million), as a result of the €6.0 million increase of loss of operating activities and the €1.8 million increase in the (non- cash) financial expenses. • Cash outflows from operations increased by €6.6 million to €13.7 million during 9M 2014 (9M 2013: €7.1 million), mainly as a result of the €7.3 million increase in manufacturing activities for Ruconest®, ahead of the anticipated US launch in 4Q 2014.
• Cash at the end of the first nine months of 2014 increased to €23.8 million (2013 FY: €19.2 million). • The equity position increased from €5.0 million at year end 2013 to €15.9 million, mainly as a result of the private equity placement of net €14.0 million in April 2014 and the exercise of warrants. • The net profit in third quarter was €1.3 million. The net loss from operating activities in the third quarter of €4.2 million was more than compensated by the (non-cash) gain in financial income and expenses of €5.2 million during the third quarter. This (non- cash) gain stems from a correction of €2.4 million in the accounting of the fair value of warrants at 30 June 2014 and the decrease of the fair value of the same warrants of €2.8 million in 3Q 2014. The operating costs of €4.7 million in 3Q included the (non-cash) costs for the share-based compensation of €1.3 million and costs for the start of a Phase II clinical study of Ruconest® as prophylaxis for HAE of €0.3 million.
OPERATIONAL HIGHLIGHTS
• US partner Salix Pharmaceuticals Inc. is preparing to launch Ruconest® during 4Q 2014 having received approval from the FDA for Ruconest® on 16 July 2014.
• A US$20 million milestone payment from Salix will become payable within 30 days after the first commercial sale of Ruconest® in the US or within 90 days since FDA approval.
• New product leads for enzyme replacement therapy products in Pompe’s, Fabry’s and Gaucher’s diseases, as well as Factor VIII and Factor IX for Haemophilia A and B were acquired through the acquisition of certain assets of TRM SASU for €0.5 million in cash.
• A Phase II clinical study of Ruconest® for prophylaxis of Hereditary Angioedema was announced. Salix and Pharming will equally share the costs of the study. On FDA approval for prophylaxis of HAE an undisclosed milestone will become payable by Salix to Pharming.
POST-PERIOD HIGHLIGHT
• Pharming and Swedish Orphan Biovitrum amended and extended the Ruconest® Distribution Agreement. Pharming is in the process of initiating directly commercialization of Ruconest® in Austria, Germany and the Netherlands. Sales through such direct commercialization are anticipated to increase the yield of EU sales.
Sijmen de Vries, Chief Executive Officer of Pharming, commented: “During this first nine months of 2014 we prepared for US market entry by investing in building inventories of Ruconest®. At the same time, we strengthen the balance sheet with a “sub-10%” private placement to institutional investors that yielded €14.7 million, which ensured that we were able to co- invest to develop our main asset Ruconest® for additional indications, such as the start of the Phase II clinical study in prophylaxis of HAE. In addition, we announced our involvement in direct commercialization activities in Austria, Germany and Netherlands.
We have executed on the next step of our strategic plan to leverage our unique production platform through the acquisition of product leads for additional enzyme replacement therapies in orphan diseases such as Pompe, Fabry and Gaucher’s disease and additional leads to Factor VIII for Haemophilia A, to further support the collaboration with Sinopharm’s SIPI. Following the FDA approval of Ruconest® in the USA, we are looking forward to the launch of Ruconest® during Q4 and the receipt of the US$20 million milestone from Salix. In addition we will receive 30 % of US net sales, up to $100 million annual sales. For annual US net sales in excess of US$100 million this will stepwise increase up to 40 % of net sales. These proceeds, together with the start of direct commercialization of Ruconest® in Austria, Germany and Netherlands, should begin to drive profitable sales revenues from 2015 onwards and should help us meet our aim of future financial sustainability.”
Contact
Sijmen de Vries, CEO: T: +31 71 524 7400
FTI Consulting
Julia Phillips/ Victoria Foster Mitchell, T: +44 203 727 1136
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