Business Context and Reporting Period
Pharming Group N.V. is a commercial-stage biopharmaceutical company focused on rare and ultra-rare diseases. Its primary commercial product is RUCONEST® for acute hereditary angioedema, with leniolisib for activated PI3K delta syndrome (APDS) and the investigational gene therapy OTL-105 in the pipeline.
This Form 6-K, dated March 17, 2022, furnishes the company’s preliminary, unaudited financial results for the year ended December 31, 2021. The company changed its presentation currency from euros to U.S. dollars effective January 1, 2021.
Financial Metrics
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Revenue | US$198.9 million | US$212.2 million | Down 6% |
| Gross profit | US$177.7 million | US$188.6 million | Down 6% |
| Gross margin | Approximately 89.4% | Approximately 88.9% | Improved modestly |
| Operating profit | US$13.6 million | US$76.3 million | Down 82% |
| Operating margin | Approximately 6.8% | Approximately 35.9% | Down materially |
| Profit for the year | US$16.0 million | US$37.7 million | Down 58% |
| Net margin | Approximately 8.0% | Approximately 17.8% | Down materially |
| Operating cash flow | US$37.8 million | US$83.6 million | Down 55% |
| Cash and marketable securities | US$193.0 million | US$206.7 million | Down 7% |
| Basic earnings per share | US$0.025 | US$0.058 | Down 57% |
U.S. RUCONEST revenues were US$193.4 million, down 5% from US$202.7 million. Quarterly U.S. revenue increased 3% in the fourth quarter to US$52.4 million. European revenue declined to US$4.9 million from US$8.2 million, while rest-of-world revenue declined to US$0.5 million from US$1.3 million.
Operating costs increased to US$166.8 million from US$114.2 million, including increased research and development, general and administrative, and marketing and sales spending. Reported operating profit included approximately US$23.3 million of identified one-off costs, including the US$13.1 million upfront payment for OTL-105 and US$10.2 million of impairment losses. Operating profit before these one-off costs was US$36.9 million.
Net finance income was US$8.8 million, compared with net finance expense of US$32.5 million in 2020, primarily reflecting favorable foreign-exchange effects of approximately US$14.8 million on U.S.-dollar cash balances and the absence of certain 2020 settlement costs.
Cash and cash equivalents were US$191.9 million at year-end, with restricted cash bringing total cash and marketable securities to approximately US$193.0 million. Investing cash outflows were US$21.3 million and financing cash outflows were US$27.9 million. The company paid the final US$25.0 million contingent-consideration installment to Bausch Health and US$4.4 million of loan interest.
At December 31, 2021, the company reported US$140.9 million of convertible bonds, including current and non-current portions, and US$20.9 million of lease liabilities. Shareholders’ equity was US$192.9 million. The filing does not provide a separate net-debt measure.
Material Changes Versus the Prior Comparable Period
- Revenue declined 6%, mainly because of lower U.S. RUCONEST sales following COVID-19-related prescription pre-filling, reduced physician visits, and prescription renewal delays early in 2021.
- Operating profit and net profit fell substantially as Pharming increased investment in its pipeline, launch preparations, personnel, compliance, and insurance.
- Research and development expense increased to US$70.4 million from US$38.5 million; general and administrative expense increased to US$37.0 million from US$24.1 million; and marketing and sales expense increased to US$59.4 million from US$51.6 million.
- Cash generation remained positive but declined substantially, while year-end cash and marketable securities decreased by US$13.7 million.
- Headcount increased to 300 full-time equivalents from 229, reflecting expansion to support future growth.
- Pharming terminated plans to develop its own downstream RUCONEST production capacity after extending its Sanofi manufacturing partnership. This resulted in a US$5.4 million impairment but is expected to avoid more than US$40 million of future capital expenditures.
- Other impairments included US$4.8 million related to a more convenient RUCONEST formulation and US$0.3 million related to an alpha-galactosidase development asset.
Guidance, Outlook, Risks and Unusual Items
- For 2022, management expects a return to single-digit group revenue growth from RUCONEST, driven by the United States and expanded European operations, subject to the COVID-19 situation. Quarterly revenue fluctuations are expected.
- Regulatory filings for leniolisib with the FDA and EMA were planned to begin in the second quarter of 2022. Commercial launch was expected from early first quarter 2023 onward, subject to regulatory approvals.
- Launch preparations and focused clinical development for leniolisib are expected to significantly increase investment and reduce profit. Management expects RUCONEST cash flow to fund the current business without additional financing.
- Pharming reported positive top-line pivotal-study data for leniolisib after period end, with both co-primary endpoints met. The filing notes that regulatory and commercial timing remains approval-dependent.
- The company entered into a strategic collaboration with Orchard Therapeutics for OTL-105, an investigational ex-vivo autologous HSC gene therapy for HAE, and paid a US$13.1 million upfront amount.
- COVID-19 continued to affect sales and marketing activities, clinical development timelines, and supply-chain access to manufacturing consumables, although management reported no impact on RUCONEST production, availability, or distribution.
- Management intends to consider acquisitions and in-licensing of late-stage rare-disease assets. Any required financing could come from the balance sheet and capital markets.
- The financial statements are unaudited. Management identifies clinical, regulatory, scientific, technical, commercialization, trial-cost, COVID-19, working-capital, and cash-resource risks. Actual results may differ materially from forward-looking statements.
Important Facts for Investors to Verify
- Confirm the final audited 2021 results and reconcile the reported US$36.9 million operating profit before one-off costs with the US$13.6 million reported operating profit.
- Track RUCONEST U.S. prescription trends, patient enrollment, competitive pressure, and the sustainability of the expected 2022 single-digit revenue growth.
- Verify the timing and regulatory status of leniolisib filings, approval decisions, launch preparations, and associated spending.
- Assess the clinical, regulatory, funding, and manufacturing risks associated with OTL-105 and other pipeline programs.
- Monitor cash burn, operating cash flow, convertible-bond obligations, lease liabilities, and the company’s stated expectation that no additional financing is needed for the current business.
- Review the full 2021 Annual Report and risk disclosures, which the company stated would be published on April 6, 2022.