Pharming announces preliminary financial results 2010
(Thomson Reuters ONE) -
Leiden, The Netherlands, March 3, 2011. 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, 2010.
Highlights 2010
* Income of ?1.8 million for the period (2009 ?1.1 million)
* Closed a commercialization agreement for Ruconest(TM) with Swedish Orphan
Biovitrum International (SOBI) for 24 EU countries plus Norway, Iceland and
Switzerland and received an upfront payment and a EU approval milestone at
achievement of the EU approval, totaling ?8.0 million
* European launch of Ruconest(TM), recorded first sales in late December
(Norway and Denmark)
* Closed a commercialization agreement with Santarus (SNTS) for the
commercialization of Rhucin® in North America and received a US$15.0 million
upfront payment
* Under this agreement with Santarus, an additional US$30 million may
potentially become payable based on achieving certain clinical and
commercial milestones and US$5 million for the acceptance of the BLA for
review by the FDA
* Under the same agreement, a further US$45 million may be received upon
reaching certain levels of aggregate net sales levels of Rhucin. The
amount of each such sales based milestone payment varies upon the level
of net sales in a calendar year. The maximum amount of all such
milestone payments to Pharming would be US$45 million, assuming net
sales exceeded US$500 million in a calendar year
* Submitted the BLA to the US FDA
* Operating cash outflows decreased by 20% to ?22.4 million in 2010 compared
to ?28.0 million for 2009). This cost reduction was mainly a result of
decreasing R&D costs from ?24.4 million (2009) to ?19.1 million. In addition
these operating cash outflows for 2010 included ?2.9 million (2009: ?3.1
million) for the DNage business unit which will not recur in 2011
* Primarily due to significant (non- cash) impairment charges of ?20.7 million
related to goodwill and intangibles associated with the voluntary
liquidation of DNage, the operating loss increased to ?44.1 million (2009:
?27.8 million)
* In December Pharming entered into an equity agreement with Socius to receive
?16.1 million in gross proceeds
* Throughout the year the capital structure improved as debt was settled and
equity added
* At year-end 2010 cash and cash equivalents (including restricted cash) were
?10.5 million (2009: ?2.3 million) with an additional ?9 million receivable
from Socius which was received in January 2011
Sijmen de Vries, CEO, commented "This has been a breakthrough year for Pharming.
We are now at the beginning of a transformational period in the evolution of the
company as we move from a development led organisation towards a commercially
focussed one. Throughout 2010 we consistently delivered upon our stated targets.
We have gained our first major product approval, for Ruconest in Europe,
appointed strong commercialization partners in key markets and substantially
improved our capital structure and bolstered our balance sheet. We look forward
to advancing the European roll out of Ruconest and, despite the recent set-back
with the FDA, to continuing progress with bringing Rhucin to the US market as
expeditiously as possible with our partner Santarus. I remain very excited about
Pharming's prospects in 2011 and beyond."
Financials overview
2010 revenues of ?0.6 million include the portion of upfront and milestone
payments received from new partnerships with Santarus and SOBI as well as first
product sales following market launch of Ruconest. In Q2 2010, the Company
entered into a distribution agreement with SOBI under which a ?3.0 million
upfront payment was received. The Company received a further ?5.0 million Market
Approval milestone payment in Q4 2010 on receipt of the marketing authorisation
approval for Ruconest in Europe. These cash receipts are not recognised as
revenues immediately but deferred and released to the statement of revenue over
the 10 year lifetime of the agreement.
Pharming also received an upfront payment of US$15.0 million (?11.7 million)
from Santarus with respect to a license agreement for recombinant human C1
inhibitor in the US, Canada and Mexico. A similar accounting treatment applies
to this upfront payment as of the start of the agreement.
Operational costs decreased in 2010 compared to 2009 with 2010 R&D costs reduced
significantly by 22% to ?19.1 million (2009: ? 24.5 million); the decrease stems
mainly from various costs savings as 2009 costs included significant DNage costs
(?4.4 million) and costs associated with the EMA filing for Ruconest. Our
general and administrative costs were ?3.3 million, slightly below last year
(2009: ?3.6 million).
The most significant item in the consolidated statement of income for 2010 is
the high level of impairment charges. These relate overwhelmingly to the
impairment of goodwill and intangible assets of DNage. In the second half of
2010, the Company financed the operations of DNage through the (maximum) bridge
funding facility of ?1.2 million.
In January 2011, a significant majority of DNage shareholders voted to put DNage
into voluntary liquidation and accordingly the remaining carry value of the
goodwill (?1.8 million) as well as the intangible assets representing the
minimum future discounted cash flows from DNage product lines (?16.8 million)
were fully impaired. These Q4 2010 charges were partially offset with a similar
release of a deferred tax liability, which has been linked to the value of the
intangible assets, in the amount of ?4.3 million. Additional impairment charges
of ?2.1 million in Q4 2010 relate to inventories.
The financial income and expenses in 2009 and 2010 are mainly non-cash and are
primarily driven by transactions with bondholders and Yorkville Associates,
anti-dilution share rights triggered by timing of securities issues as well as
the interest on earn-out obligations in relation to DNage.
In December 2010, Pharming entered into an equity agreement with Socius Capital
to raise ?16.1 million. As part of the agreement Pharming issued debt notes with
a nominal value of ?12,000,000 carrying nominal interest of 10% per annum over a
four year period. Socius exercised its right to subscribe for shares up to
?16,080,000. Payment of these shares by Socius is part settled in cash
(?3,033,962 for the nominal value, received early 2011) and partly through
issuance of debt notes Socius to Pharming which carry 0.65% interest per annum
over a four year period.
After four years, the nominal values of the debt notes issued by Pharming and
Socius (including accrued nominal interest) are equal; and the mutual debts are
off-settable.
The structure of the agreement is, in substance, an all equity agreement
(including the warrants as the number and exercise price are both fixed) so that
the overall accounting treatment in 2010 is as follows:
* ?4,830,000 received in cash and ?9,034,000 carried in other current assets
as a receivable at nominal value (the ?9,034,000 was received from Socius in
January 2011)
* the 75,849,057 shares issued , the outstanding warrants and the residual
value of the transaction are all charged within equity
Overall, the net increase of equity amounts to ?13,733,000. No (financial)
assets or liabilities nor effective interest income or expenses are recognised
throughout the lifetime of the mutual notes.
Operational outlook
2010 marked the beginning of a transformational period in Pharming's evolution
as the company accomplished the most significant steps yet in its transition
from a late-stage development company to an emerging pharmaceutical business.
This commercial phase is led by our lead product Ruconest(TM)/Rhucin®
(recombinant human C1 inhibitor).
European Launch
We believe that the prevalence of HAE is approximately 1/30,000 which implies a
target population of 11,000-12,000 potential patients. Our commercialisation
partner SOBI estimates the market to be worth approximately ?100 million and
this is expected to grow as both physician and patient awareness increase,
driving additional needs for effective therapies against acute attacks. In Q4
Ruconest was launched and in December the first sales were made in Norway and
Denmark. The European region requires a step wise approach to launching a drug
as each country has its own reimbursement guidelines. We anticipate that the
European roll out will be completed by Q4 2011.
US regulatory process
In February 2011, a "refusal to file" letter for the Rhucin BLA was received
from the FDA. The FDA required that the results of the ongoing Phase IIIb study,
which has been initiated based on previous discussions with the FDA, to be
included in a future BLA filing. The FDA also indicated that they would provide
additional feed- back on the ongoing study. Santarus and Pharming intend to
jointly meet with the FDA to discuss the issues raised.
Geographical expansion
We also aim to complete additional partnering deals on our lead asset
(Ruconest/Rhucin) outside of Europe and the US to increase its geographic and
regional coverage.
Broadening C1 inhibitor franchise
We aim to evaluate the utility of our recombinant C1 inhibitor asset in other
indications such as reperfusion injury. With the EMA approval, preparations for
development of Rhucin in other larger indications have started to gain momentum.
As a result, the first Phase II study for development of a C1 inhibitor product
for applications in the field of transplant indications, such as the treatment
of antibody-mediated rejection in kidney transplantation, was initiated at the
end of 2010.
Index inclusion
As of March 21, 2011, Pharming's shares will be included in the Amsterdam Midcap
Index (AMX-index).
Conference call information
Today, Chief Executive Officer Sijmen de Vries and Chief Financial Officer, Karl
Keegan will present the preliminary full year 2010 results in a conference call
for analysts at 9:30 am CET. To participate, please call one of the following
numbers 10 minutes prior to the call:
Analyst call (Confirmation Code: 6664868)
Participant Telephone Numbers: +31 (0)20 713 3420 Netherlands Toll
+44 (0)20 7138 0823 UK Toll
Following a brief presentation of the results, the lines will be opened for a
question and answer session.
About RHUCIN (RUCONEST in European countries) and Hereditary Angioedema
RHUCIN (INN conestat alfa) is a recombinant version of the human protein C1
inhibitor (C1INH). RHUCIN is produced through Pharming's proprietary technology
in the milk of transgenic rabbits and in Europe is approved under the name
RUCONEST for treatment of acute angioedema attacks in patients with HAE. The FDA
has granted Orphan Drug Status to RHUCIN for the treatment of acute attacks of
HAE, a genetic disorder in which the patient is deficient in or lacks a
functional plasma protein C1 inhibitor, resulting in unpredictable and
debilitating episodes of intense swelling of the extremities, face, trunk,
genitals, abdomen and upper airway. The frequency and severity of HAE attacks
vary and are most serious when they involve laryngeal edema, which can close the
upper airway and cause death by asphyxiation. According to the U.S. Hereditary
Angioedema Association, epidemiological estimates for HAE range from one in
10,000 to one in 50,000 individuals. Additional information is available on the
international patient association's website,www.haei.org.
About Pharming Group NV
Pharming Group NV is developing innovative products for the treatment of unmet
medical needs. Ruconest(TM) (Rhucin® in non-European territories) 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. 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.
Contact
Karl Keegan, CFO, Pharming Group NV, T: +31 (0)71 52 47 181 or +31 (0)6
3168 0465
The full report including tables can be downloaded from the following link:
Q4 Report 2010:
http://hugin.info/132866/R/1494061/429823.pdf
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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
[HUG#1494061]
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Datum: 03.03.2011 - 07:00 Uhr
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