Pharming Group N.V. — Form 6-K Summary
Reporting period: Six months ended June 30, 2022, filed August 4, 2022. The interim financial statements are preliminary, unaudited, and prepared under IAS 34. Pharming is a biopharmaceutical company commercializing RUCONEST for hereditary angioedema and developing leniolisib for activated PI3K delta syndrome (APDS).
Financial performance and liquidity
| Metric | H1 2022 | H1 2021 | Change |
|---|---|---|---|
| Revenue | US$96.8 million | US$93.2 million | 4% |
| Gross profit | US$87.9 million | US$83.8 million | 5% |
| Operating profit | US$20.6 million | US$17.2 million | 20% |
| Net profit | US$19.2 million | US$14.4 million | 33% |
| Basic EPS | US$0.029 | US$0.022 | 32% |
| Diluted EPS | US$0.027 | US$0.019 | 42% |
| Operating cash flow | US$4.6 million | US$16.4 million | Decrease |
| Cash and marketable securities | US$190.9 million | US$189.8 million | 1% |
Gross margin was approximately 90.8%, operating margin approximately 21.3%, and net margin approximately 19.8%. Revenue was concentrated in the United States, which represented 97% of total revenue; Europe and the rest of the world represented 3%.
Cash and cash equivalents were US$190.0 million at June 30, 2022, compared with US$191.9 million at December 31, 2021. Including restricted cash, total cash and marketable securities were US$190.9 million. Operating cash flow was reduced by working-capital investments, including higher inventories and receivables, and income taxes paid.
The carrying value of convertible bonds was US$130.0 million at June 30, 2022, consisting primarily of the 3.00% convertible bonds due 2025. Lease liabilities totaled US$19.0 million. Total shareholders’ equity was US$199.7 million. Management stated that no additional financing is expected to support the current business, although capital-market funding may be used for acquisitions or in-licensing.
Material changes versus the prior comparable period
- RUCONEST revenue increased 4%, supported by more prescribing physicians and patients. Second-quarter revenue increased 1% to US$50.1 million.
- Operating costs increased to US$82.2 million from US$68.0 million, mainly because of higher research and development, leniolisib launch preparation and manufacturing costs, and increased post-COVID travel.
- Other income increased to US$15.0 million from US$1.4 million, primarily due to a US$12.8 million gain from reducing Pharming’s BioConnection stake from 43.85% to 22.98%. The transaction generated net cash proceeds of US$7.5 million.
- The BioConnection transaction was a significant contributor to the increase in operating and net profit and should be treated as non-recurring.
- Currency translation losses of US$14.8 million reduced comprehensive income, which was US$3.7 million compared with US$8.8 million in H1 2021.
Guidance, outlook, risks and unusual items
- Management expects single-digit revenue growth from RUCONEST for full-year 2022, subject to potential COVID-19-related business restrictions and quarterly fluctuations.
- Pharming expects to submit leniolisib marketing applications to the EMA and UK MHRA in the second half of 2022. The EMA granted accelerated assessment, and a U.S. New Drug Application was submitted on July 29, 2022.
- Subject to FDA approval and priority review, U.S. approval was expected in the first quarter of 2023, with launch anticipated early in the second quarter. European Economic Area and UK launches were targeted for the second half of 2023.
- Launch preparations and focused clinical development for leniolisib are expected to continue weighing on 2022 profit.
- Pharming discontinued further development of rhC1INH for acute kidney injury and pre-eclampsia and de-prioritized large-scale rhC1INH production using its transgenic cattle herd. The AKI Phase IIb trial was to continue while strategic options were evaluated.
- The company continued pediatric leniolisib planning, OTL-105 gene-therapy development with Orchard Therapeutics, and preclinical Pompe disease work.
- The filing provides no further specific financial guidance for 2022. Forward-looking statements remain subject to clinical, regulatory, technical, commercial, financing, currency and COVID-19 risks.
- The interim financial statements were not audited by Pharming’s statutory auditor. Management assessed funding for at least twelve months after issuance as realistic and achievable and prepared the statements on a going-concern basis.
Investor verification points
- Verify RUCONEST prescription, patient, geographic and quarterly volume trends, given the concentration of revenue in the U.S.
- Assess the sustainability of reported profit after excluding the US$12.8 million BioConnection gain and considering increased leniolisib spending.
- Track operating cash conversion, inventory growth, working-capital requirements and cash consumption as leniolisib launch spending increases.
- Confirm FDA review status, priority-review designation, approval timing and launch readiness for leniolisib.
- Monitor EMA and UK regulatory submissions and the feasibility of the planned 2023 European launches.
- Evaluate the financial and strategic consequences of discontinuing the acute kidney injury and pre-eclampsia programs.
- Review the maturity, conversion terms and potential dilution associated with the convertible bonds, options and other share rights.