Pharming Group N.V. — Form 6-K Summary
Reporting period: Six months ended June 30, 2021. The filing, dated August 5, 2021, contains preliminary unaudited interim results reported primarily in U.S. dollars.
Business Context
Pharming is a commercial-stage biopharmaceutical company focused on rare diseases. Its principal product is RUCONEST, a recombinant human C1 esterase inhibitor for acute hereditary angioedema. The company is also developing leniolisib for activated PI3K delta syndrome (APDS) and earlier-stage therapies, including additional rhC1INH indications and OTL-105.
Key Financial Metrics
| U.S.$ millions, except per-share data | H1 2021 | H1 2020 | Change |
|---|---|---|---|
| Revenue | 93.2 | 97.8 | -5% |
| Gross profit | 83.8 | 86.9 | -4% |
| Operating profit | 17.2 | 35.7 | -52% |
| Profit for the period | 14.4 | 20.3 | -29% |
| Basic EPS | $0.022 | $0.032 | -31% |
| Diluted EPS | $0.019 | $0.028 | -32% |
- Gross margin was approximately 89.8%, compared with approximately 88.9% in H1 2020.
- Operating margin was approximately 18.4%, compared with approximately 36.5% in H1 2020.
- Net margin was approximately 15.4%, compared with approximately 20.8% in H1 2020.
- U.S. revenue was $90.1 million, down 4%; Europe and Rest of World revenue was $3.2 million, down from $4.0 million.
- Second-quarter revenue was $49.7 million, up 15% year over year and 14% sequentially, reflecting recovery in U.S. healthcare activity and RUCONEST demand.
- Other operating costs increased to $68.0 million from $51.8 million, driven by higher R&D, leniolisib launch preparation and manufacturing costs, employee costs, insurance, share-based compensation, and compliance costs.
- Operating cash flow was $16.4 million, compared with $44.9 million in H1 2020.
- Investing cash outflow was $7.7 million. Financing cash outflow was $25.0 million, including a $25.0 million milestone payment to Bausch Health related to the RUCONEST North American rights reacquisition.
- Cash and cash equivalents were $188.3 million at June 30, 2021, compared with $205.2 million at December 31, 2020. Including restricted cash, reported cash and marketable securities were $189.8 million.
- Convertible bond liabilities totaled approximately $147.4 million at June 30, 2021, consisting of $145.4 million non-current and $2.0 million current liabilities. The bonds carry a 3.00% coupon and mature in 2025.
- Shareholders’ equity increased to $198.1 million from $183.4 million at year-end 2020.
Material Changes Versus the Prior Comparable Period
- Revenue and gross profit declined for the half year because of COVID-19-related disruption, particularly in the U.S. during the first quarter, although second-quarter performance recovered.
- Profitability declined substantially as operating expenses increased, despite a favorable $2.5 million net finance gain in H1 2021 versus a $6.9 million net finance cost in H1 2020. The improvement primarily reflected foreign-exchange results and lower funding costs.
- Operating cash flow decreased by $28.5 million, while cash declined by $16.9 million from year-end after the Bausch Health milestone payment and other investments.
- Property, plant and equipment increased to $15.6 million from $12.2 million, reflecting production-capacity expansion. Right-of-use assets increased to $22.0 million from $9.4 million following a new 15-year lease.
- Currency translation produced a $5.6 million loss in other comprehensive income, compared with a $0.04 million gain in H1 2020.
Guidance, Outlook, Risks and Unusual Items
- Management expects continued RUCONEST revenue growth during the remainder of 2021 as pharmaceutical markets normalize, while warning of possible periodic COVID-19-related disruptions.
- The company expects to maintain positive net earnings during 2021 but provided no further specific financial guidance.
- Planned spending includes acquisitions and in-licensing, expansion of RUCONEST and leniolisib production facilities, leniolisib launch preparation, APDS development, rhC1INH trials, and OTL-105 activities.
- Patient enrollment was completed in the pivotal Phase 2/3 leniolisib study. The anticipated launch is Q4 2022, subject to regulatory approval.
- After the reporting period, Pharming licensed RUCONEST distribution in the Middle East and North Africa and entered a strategic collaboration with Orchard Therapeutics for OTL-105. The financial effects of the Orchard agreement are excluded from the June 2021 financial statements.
- Pharming states that funding operations for at least twelve months after issuance of the interim statements is realistic and achievable and prepared the statements on a going-concern basis.
- Key risks include clinical-trial scope and costs, regulatory and technical developments, product commercialization, COVID-19 effects, and the possibility that forward-looking expectations will not be achieved.
- The filing’s narrative contains an apparent inconsistency regarding the reported Q1 operating profit when describing sequential Q2 growth; investors should rely on the consolidated interim financial statements for the half-year figure.
Investor Verification Points
- Verify the pace and durability of the U.S. RUCONEST recovery after the COVID-19 disruption.
- Monitor operating-expense growth, particularly R&D, leniolisib launch costs, manufacturing, insurance, and employee-related expenses.
- Assess cash consumption after the Bausch Health milestone payment and planned production and clinical investments.
- Confirm the regulatory timetable and approval probability for leniolisib, targeted for launch in Q4 2022.
- Review the terms and future financial impact of the Orchard Therapeutics collaboration and other business-development transactions.
- Evaluate convertible-bond obligations, dilution from options and other instruments, and the company’s ability to maintain positive earnings while investing in its pipeline.