Pharming Group N.V. — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone Q4 filing. Financial statements are prepared under IFRS and presented in U.S. dollars; comparative figures were retrospectively translated after the company changed its presentation currency from euros to dollars.
Business context and financial performance
Pharming is a commercial-stage biopharmaceutical company focused on rare diseases. RUCONEST, its recombinant C1 esterase inhibitor for acute hereditary angioedema (HAE) attacks, remained its principal marketed product and revenue source. The company sells directly in the U.S., EU and U.K., and through distributors elsewhere.
| Metric (US$ millions, except per-share data) | 2021 | 2020 | Change |
|---|---|---|---|
| Revenue | 198.9 | 212.2 | -6.3% |
| Gross profit | 177.7 | 188.6 | -5.8% |
| Gross margin | 89.4% | 88.9% | +0.5 pts |
| Operating profit | 13.6 | 76.3 | -82.2% |
| Operating margin | 6.8% | 35.9% | -29.1 pts |
| Profit for the year | 16.0 | 37.7 | -57.6% |
| Net margin | 8.0% | 17.8% | -9.8 pts |
| Basic EPS | $0.025 | $0.058 | — |
| Net cash from operating activities | 37.8 | 83.6 | -54.7% |
U.S. revenue was $193.4 million, down from $202.7 million; Europe revenue was $4.9 million versus $8.2 million; and rest-of-world revenue was $0.5 million versus $1.3 million. Two U.S. specialty wholesalers accounted for 79% of 2021 revenue, compared with 76% in 2020.
Liquidity, debt and cash flow
- Year-end cash and cash equivalents were $191.9 million; including restricted cash, total cash was $193.0 million, compared with $206.7 million a year earlier.
- Current assets were $249.4 million and current liabilities $46.8 million. Shareholders’ equity was $192.9 million.
- Convertible bonds due 2025 had a carrying value of $140.9 million, including $1.9 million current and $139.0 million non-current. The bonds bear 3% interest and are convertible at an initial price of approximately €2.00 per share. Lease liabilities were $20.9 million.
- The company reported net debt of negative $52.1 million—equivalent to net cash of $52.1 million—under its definition, which nets cash and restricted cash against borrowings and convertible bonds but excludes lease liabilities.
- Investing cash outflow was $21.3 million, including $10.7 million of capital expenditures. Financing cash outflow was $27.9 million, including a $25.0 million contingent-consideration payment and lease and interest payments.
Material changes and unusual items
- Revenue declined as U.S. sales fell and European and other-market sales were lower. Management attributed U.S. fluctuations to COVID-related limits on physician access, patient prescription stockpiling in Q4 2020, subsequent lower refill rates and fewer early-2021 enrollments; new enrollments increased later in 2021.
- Research and development expense rose 82.7% to $70.4 million, including $13.1 million related to OTL-105 and increased clinical-program spending. General and administrative expense rose 53.5% to $37.0 million, and sales and marketing expense rose 15.2% to $59.4 million.
- Operating profit also reflected $10.4 million of impairment charges: $5.4 million on the planned Pivot Park downstream production facility, which the company decided not to pursue, and approximately $5.0 million on development programs, including a more convenient RUCONEST formulation.
- Net finance income was $8.8 million, versus net finance expense of $32.5 million in 2020. A $14.8 million favorable foreign-exchange result on U.S.-dollar cash balances was a significant factor; 2020 included $19.2 million of foreign-exchange losses and $4.3 million of loan-settlement costs.
- Although net profit was positive, total comprehensive income was a loss of $1.1 million, mainly reflecting currency translation and fair-value movements.
Outlook, risks and contingencies
- Management expected RUCONEST proceeds in 2022 to cover operating costs, financing costs and capital expenditure, while cautioning that it could not assure the timing or level of future profits. It expected cash to decline in 2022 as it invested in the business.
- Pharming planned to submit a U.S. NDA for leniolisib in mid-2022, followed by European and other applications, and expected a Q1 2023 launch if approvals were obtained. Launch preparation was expected to weigh on 2022 profit. These are forward-looking expectations, not guaranteed outcomes.
- Leniolisib’s Phase 2/3 study in APDS met its co-primary endpoints, with statistically significant improvements in lymph-node size and naïve B-cell proportion. Approval and commercialization remain subject to regulatory review.
- Other development programs include rhC1INH for acute kidney injury and pre-eclampsia, OTL-105 gene therapy for HAE, and a preclinical Pompe disease enzyme-replacement candidate. COVID-19 trials produced mixed results; the company said it would not pursue further COVID-19 studies.
- Key business risks include dependence on RUCONEST and the HAE market, competition and pricing pressure, reliance on a small number of U.S. wholesalers and third-party manufacturers, reimbursement and regulatory uncertainty, clinical-development risk, supply-chain disruption, foreign-exchange exposure, and COVID-related operational effects.
- Potential obligations include approximately $97.3 million of manufacturing and development agreement commitments, with $22.2 million relating to 2022 and $75.0 million to 2023 and later. Novartis leniolisib milestones could total up to $200 million, plus tiered royalties. A French pricing authority sought approximately €750,000 related to 2018 sales; Pharming disputed the claim.
- The company had never paid dividends and did not expect to do so in the foreseeable future. The auditor issued an unqualified opinion on the financial statements but an adverse opinion on internal control over financial reporting. Management identified material weaknesses across all five COSO components and said remediation was in progress.
Most important facts for investors to verify
- Whether RUCONEST sales stabilize or grow, and whether dependence on two U.S. wholesalers and the U.S. market remains high.
- Progress, timing, regulatory decisions and commercial readiness for leniolisib, including the effect of launch spending on cash and earnings.
- Execution and funding of the development pipeline and the size and timing of milestone, royalty and manufacturing commitments.
- Cash generation and liquidity relative to the 2025 convertible-bond maturity, lease obligations and planned investments.
- Whether management remediates the disclosed internal-control material weaknesses and whether reporting remains reliable.
- Resolution of the French reimbursement claim and any changes in foreign-exchange effects, product pricing, reimbursement or supply availability.