Pharming Group N.V. — Form 6-K Summary
Reporting period: Three months ended March 31, 2024. The filing, dated May 8, 2024, contains preliminary unaudited results for Pharming Group N.V., a global biopharmaceutical company commercializing RUCONEST® and Joenja® (leniolisib).
Financial performance and position
| Metric | 1Q 2024 | 1Q 2023 | Change |
|---|---|---|---|
| Total revenue | US$55.6 million | US$42.5 million | +31% |
| RUCONEST® revenue | US$46.0 million | US$42.5 million | +8% |
| Joenja® revenue | US$9.6 million | US$0.0 million | New revenue stream |
| Gross profit | US$47.2 million | US$38.5 million | +23% |
| Operating profit/(loss) | (US$16.3 million) | (US$13.7 million) | Higher loss |
| Net profit/(loss) | (US$12.4 million) | (US$12.2 million) | Broadly unchanged |
| Operating cash flow | (US$7.6 million) | (US$22.8 million) | Improved |
| Cash, restricted cash and marketable securities | US$203.5 million | US$215.0 million at Dec. 31, 2023 | Down US$11.5 million |
Margins: Gross margin was approximately 84.9%, compared with approximately 90.5% in 1Q 2023. The operating margin was approximately negative 29.3%, and the net margin was approximately negative 22.4%. The lower gross margin reflected, in part, a non-recurring US$2.3 million inventory impairment.
Operating expenses increased to US$63.9 million from US$52.7 million, driven by continued Joenja investment in the United States, preparation for ex-U.S. launches, increased research and development, and higher payroll costs.
At March 31, 2024, total assets were US$441.7 million, equity was US$205.9 million, and current liabilities excluding convertible bonds were US$72.4 million. Cash and cash equivalents were US$51.9 million, with marketable securities of US$150.1 million and restricted cash of US$1.5 million.
Material changes versus the prior comparable period
- Total revenue increased 31%, primarily because of the U.S. commercial launch of Joenja® and continued RUCONEST® growth.
- RUCONEST® revenue increased 8%, supported by higher U.S. volume, a U.S. price increase linked to CPI, and nearly 70 new patient enrollments.
- Joenja® generated US$9.6 million of revenue, up 21% from 4Q 2023. There were 83 U.S. patients on paid therapy at March 31, 2024, with five additional patients enrolled and awaiting authorization.
- Gross profit increased, but gross margin declined because of the inventory impairment and the changing product mix.
- Operating and net losses remained substantial as Pharming increased commercial, regulatory, clinical development, and administrative spending.
- Operating cash outflow improved materially, from US$22.8 million to US$7.6 million.
Debt, refinancing and liquidity
At March 31, 2024, the balance sheet classified approximately US$134.9 million of convertible bonds as current and no convertible bonds as non-current. After quarter-end, Pharming issued €100 million of senior unsecured convertible bonds due 2029, bearing a 4.50% coupon, and used the net proceeds to repurchase €123.1 million of its €125 million 3.00% convertible bonds due 2025. The new bonds settled on April 25, 2024, and the repurchase settled on April 26, 2024.
Management stated that current cash and continuing product cash flow are expected to fund planned investments, with no material cash burn expected before the potential impact of acquisitions or in-licensing transactions. The filing does not provide a separate post-refinancing liquidity balance.
Guidance, outlook and business update
- 2024 revenue guidance remains US$280 million to US$295 million, representing expected growth of 14% to 20%, with quarterly fluctuations.
- Management expects continued U.S. APDS patient identification through genetic testing, family testing, and resolution of variants of uncertain significance, followed by conversion to paid Joenja® therapy.
- Ex-U.S. leniolisib revenue is expected to increase through commercial launches, named-patient programs, and funded early-access programs.
- Pharming is awaiting the European Medicines Agency’s CHMP opinion on the leniolisib marketing authorization application. The U.K. application was validated on April 17, 2024.
- Israel approved Joenja® on April 30, 2024; a commercial launch is anticipated in 2025 after government payer negotiations.
- Enrollment has been completed in the pediatric trial for children aged 4 to 11, with worldwide regulatory filings planned beginning in 2025. Enrollment in the 1-to-6-year-old trial is continuing.
- Pharming is preparing a Phase II proof-of-concept trial of leniolisib in selected primary immunodeficiencies involving PI3K-delta signaling.
- The company terminated its collaboration with Orchard Therapeutics and discontinued the OTL-105 program to prioritize leniolisib development.
Risks, contingencies and unusual items
- Results are preliminary and unaudited.
- Revenue growth and guidance depend on continued RUCONEST® demand, successful Joenja® patient identification and reimbursement, and regulatory approvals in additional markets.
- Regulatory timing remains uncertain in the EEA, U.K., Canada, Australia, Japan, and for pediatric indications.
- Clinical trials and expansion into additional primary immunodeficiency indications involve clinical, regulatory, commercial, competitive, and funding risks.
- The quarter included a non-recurring US$2.3 million inventory impairment and US$2.0 million of cash received for Pharming’s shares in Orchard Therapeutics.
- The convertible bond refinancing reduced near-term 2025 maturity exposure but introduced €100 million of 2029 convertible debt with a 4.50% coupon and potential share dilution upon conversion.
- The filing includes customary forward-looking statement risks and refers investors to Pharming’s 2023 Annual Report and Form 20-F.
Facts investors should verify
- Whether Pharming achieves the US$280 million to US$295 million 2024 revenue guidance.
- The pace of conversion of identified APDS patients into paid Joenja® therapy and the effect of reimbursement decisions.
- Regulatory decisions and launch timing in the EEA, U.K., Canada, Australia, Israel, Japan, and pediatric markets.
- Whether increasing operating expenses and clinical investment are consistent with management’s liquidity expectations.
- The post-refinancing debt balance, interest burden, maturity profile, and potential dilution from the 2029 convertible bonds.
- Whether RUCONEST® growth and Joenja® expansion improve operating cash flow and reduce recurring losses.