Pharming Group N.V. — Form 6-K Summary
Filing date: May 13, 2021. The filing furnishes the company’s unaudited financial results for the quarter ended March 31, 2021. Pharming changed its presentation currency from euros to U.S. dollars effective January 1, 2021.
Business context and reporting period
Pharming is a commercial-stage biopharmaceutical company focused on rare diseases and unmet medical needs. Its principal marketed product is RUCONEST®, a recombinant human C1 esterase inhibitor for acute hereditary angioedema attacks. The company is also developing leniolisib for activated PI3K delta syndrome and investigating additional indications for RUCONEST.
Key financial metrics
| Metric | Q1 2021 | Q1 2020 | Change |
|---|---|---|---|
| Revenue | $43.6 million | $54.5 million | -20% |
| Gross profit | $38.7 million | $48.5 million | -20% |
| Gross margin | 88.9% | 89.0% | Broadly stable |
| Operating profit | $6.3 million | $21.5 million | -71% |
| Operating margin | 14.4% | 39.5% | Down materially |
| Net profit | $8.5 million | $9.3 million | -9% |
| Net margin | 19.6% | 17.0% | Improved |
| Operating cash flow | $7.1 million | $21.8 million | Down materially |
| Cash and cash equivalents | $206.6 million | $149.4 million | Higher year over year |
| Cash and marketable securities, including restricted cash | $208.5 million | $149.4 million | +40% |
Operating expenses increased to $32.7 million from $27.3 million. The increase included $2.7 million for leniolisib launch preparation and manufacturing, $1.0 million of higher insurance costs, $1.1 million of additional share-based compensation, and higher compliance and control costs.
Finance cost, net changed from a $7.8 million expense in Q1 2020 to a $6.6 million gain in Q1 2021, primarily reflecting refinancing benefits and favorable U.S. dollar/euro movements on U.S. dollar-denominated deposits and short-maturity U.S. Treasury securities.
At March 31, 2021, shareholders’ equity was $186.4 million, compared with $183.4 million at December 31, 2020. Convertible bonds totaled approximately $144.2 million, comprising $141.2 million of non-current and $3.1 million of current liabilities. Total liabilities were approximately $222.9 million. Inventories increased modestly to $21.8 million from $21.2 million at year-end 2020.
Cash flow used in investing activities was $2.6 million, including capital expenditures, intangible-asset investments, and license acquisition costs. Financing cash outflow was $2.4 million, mainly reflecting interest and lease payments. Cash and cash equivalents increased by $1.5 million from year-end 2020 after exchange-rate effects.
Material changes versus the prior comparable period
- Revenue declined 20% because U.S. patients had pre-filled RUCONEST prescriptions in Q4 2020 during a COVID-19 surge, reducing subsequent refill rates, while physician-office closures slowed patient visits, renewals, and new enrollments.
- European demand remained stable, but growth was affected by lockdowns and travel restrictions.
- Operating profit fell substantially because of lower revenue and increased operating expenses, despite a broadly unchanged gross margin.
- Net profit declined only 9% because the finance result improved significantly.
- Operating cash flow decreased to $7.1 million from $21.8 million.
- The company issued 3,406,250 shares after April 6, 2021, under option and long-term incentive plans. Shares outstanding on May 13, 2021, were 644,696,264, with 763,632,543 fully diluted shares.
Guidance, outlook, risks, and unusual items
- Management expects RUCONEST revenue to return to growth during the remainder of 2021, driven primarily by the United States and expanded European operations, subject to COVID-19 developments and ordering-pattern fluctuations.
- Management expects positive net earnings for 2021 and does not currently expect additional financing to maintain the business.
- The company plans continued investment in RUCONEST and leniolisib manufacturing capacity, leniolisib pre-marketing and registration-enabling activities, clinical trials, and potential acquisitions or in-licensing opportunities.
- Management reported a significant increase in new patient enrollment toward the end of Q1, continuing into Q2, and expects sales recovery during Q2, subject to further COVID-19 surges.
- Leniolisib launch preparation remains targeted for Q4 2022. Pharming launched a genetic-testing program for APDS in collaboration with Invitae and initiated a Phase IIb RUCONEST trial for prevention of acute kidney injury after myocardial infarction.
- COVID-19 remains a material risk to customer access, prescription renewals, clinical-trial recruitment, supply chains, and manufacturing timelines. Further delays or temporary disruptions are possible.
- The filing provides no specific quantitative financial guidance for 2021. Results are unaudited, and the filing’s forward-looking statements are subject to clinical, regulatory, technical, commercial, currency, and financing risks.
Investor verification points
- Verify the sustainability and timing of the expected U.S. RUCONEST revenue recovery.
- Monitor whether COVID-19 disruptions continue to affect patient enrollment, prescription renewals, supply chains, or clinical-trial timelines.
- Assess the effect of higher operating expenses and planned leniolisib-related investments on operating margins and cash generation.
- Review convertible-bond maturities, other financial liabilities, and the company’s ability to fund planned development and manufacturing investments without additional financing.
- Track progress toward the anticipated Q4 2022 leniolisib launch and the related regulatory and clinical milestones.
- Consider dilution from the increase in issued shares and the gap between basic and fully diluted shares outstanding.