Pharming Group N.V. Form 6-K Summary
Reporting period: Preliminary, unaudited results for the year ended December 31, 2022, furnished on March 16, 2023. Pharming is a global rare-disease biopharmaceutical company commercializing RUCONEST and developing leniolisib and other pipeline assets.
Financial Performance and Position
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Revenue | US$205.6 million | US$198.9 million | +3% |
| Gross profit | US$188.1 million | US$177.7 million | +6% |
| Operating profit | US$18.2 million | US$13.6 million | +34% |
| Profit for the year | US$13.7 million | US$16.0 million | -14% |
| Operating cash flow | US$22.9 million | US$37.8 million | Lower year over year |
| Cash and marketable securities | US$208.7 million | US$193.0 million | +8% |
| Basic earnings per share | US$0.021 | US$0.025 | -16% |
Gross margin was approximately 91.5%, compared with approximately 89.3% in 2021. Operating margin was approximately 8.9%, compared with 6.8%, while net margin was approximately 6.7%, compared with 8.0%.
Revenue was principally generated by RUCONEST. U.S. revenue increased to US$200.1 million from US$193.4 million, while European revenue remained approximately US$4.9 million. Cost of sales decreased to US$17.6 million from US$21.1 million.
Cash and cash equivalents were US$207.3 million, with restricted cash of US$1.3 million. Operating cash flow was partly offset by US$5.0 million of financing cash outflows and US$7.8 million of adverse currency translation effects. The company stated that it had full access to its cash deposits following the Silicon Valley Bank events.
Total convertible bond liabilities were approximately US$133.4 million at year-end, compared with US$140.9 million in 2021. Total lease liabilities increased to US$33.3 million from US$20.9 million, primarily due to the Pivot Park facility and other new or expanded leases. Shareholders’ equity increased to US$204.6 million from US$192.9 million.
Material Changes Versus the Prior Comparable Period
- Revenue returned to growth, driven mainly by higher U.S. RUCONEST sales, increased prescribing and patient use, and a price increase below CPI.
- Gross profit benefited from higher sales, favorable currency translation and production results.
- Operating profit improved despite higher operating costs, including investments in leniolisib development, medical affairs, commercial launch preparation, OTL-105 and organizational expansion.
- Other income increased to US$14.5 million from US$2.6 million, primarily because Pharming reduced its BioConnection ownership from 43.85% to 22.98%, receiving US$7.5 million of net cash proceeds and recognizing a US$12.2 million gain.
- Net profit declined because of higher operating costs, lower foreign-exchange gains and impairment charges, partly offset by higher revenue and BioConnection-related income.
- Inventories increased to US$42.3 million from US$27.3 million, largely due to higher work-in-progress inventory.
- Pharming stopped further development of rhC1INH for acute kidney injury and pre-eclampsia, discontinued the related Phase IIb trial, and stopped large-scale production development using its transgenic cattle program.
Guidance, Outlook, Risks and Unusual Items
- Management expects continued low-single-digit annual revenue growth from RUCONEST in 2023, with quarterly fluctuations.
- Subject to FDA approval, Pharming planned to launch leniolisib in the United States during the second quarter of 2023. The FDA PDUFA goal date was March 29, 2023.
- The EMA moved leniolisib to a standard review timetable and requested updated long-term extension-study data. Pharming anticipated a CHMP opinion in the second half of 2023 and European authorization approximately two months later.
- Pharming planned a U.K. filing shortly after a positive CHMP opinion and was preparing pediatric, Japanese and additional-indication development programs. An orphan drug designation application was filed in Japan on March 9, 2023.
- Profit in 2023 is expected to be affected by continued investments in leniolisib launch preparation, commercialization, pediatric and Japan approvals, additional indications and pipeline development. No specific 2023 financial guidance beyond the RUCONEST revenue outlook was provided.
- Management expects cash on hand and continuing RUCONEST cash generation to fund planned investments, while retaining potential access to capital markets for acquisitions or in-licensing.
- Key risks include regulatory approval and launch timing for leniolisib, clinical and preclinical development outcomes, commercialization execution, competition and pricing pressure in HAE, foreign-exchange movements, costs of pipeline expansion, and the possibility that forward-looking expectations will not be achieved.
- The filing identifies the results as preliminary and unaudited. The full risk profile was expected in the 2022 Annual Report and Form 20-F.
Important Facts for Investors to Verify
- Final audited 2022 results and any changes in the Annual Report and Form 20-F.
- FDA action on leniolisib, subsequent launch timing and initial commercial uptake.
- EMA review progress, CHMP opinion timing and the effect of the requested long-term extension data.
- 2023 RUCONEST revenue trends, especially U.S. volume, pricing and competitive pressure.
- Cash usage and operating expense growth associated with leniolisib commercialization and pipeline programs.
- Terms, maturity and settlement requirements of the convertible bonds and the increased lease obligations.
- Potential impairments or alternative uses relating to the Pivot Park downstream facility and discontinued programs.
- Funding requirements and strategic rationale for any future acquisitions, in-licensing transactions or capital-markets activity.