Pharming Group N.V. — Form 6-K Summary
Reporting period: Second quarter and six months ended June 30, 2023. Filed August 3, 2023. The interim financial statements are prepared under IAS 34 and are unaudited.
Business context
Pharming is a biopharmaceutical company commercializing RUCONEST® for acute hereditary angioedema and Joenja® (leniolisib) for activated phosphoinositide 3-kinase delta syndrome (APDS). Joenja received U.S. FDA approval in March 2023 and began commercial launch during the second quarter.
Financial performance and liquidity
| Metric | 1H 2023 | 1H 2022 | 2Q 2023 | 2Q 2022 |
|---|---|---|---|---|
| Total revenue | US$97.4m | US$96.8m | US$54.9m | US$50.1m |
| RUCONEST revenue | US$93.6m | US$96.8m | US$51.1m | US$50.1m |
| Joenja revenue | US$3.8m | — | US$3.8m | — |
| Gross profit | US$87.6m | US$87.9m | US$49.2m | US$46.1m |
| Operating profit/(loss) | (US$8.4m) | US$20.6m | US$5.3m | US$17.8m |
| Net profit/(loss) | (US$10.9m) | US$19.2m | US$1.3m | US$15.7m |
- Total revenue increased 1% in the first half and 9% in the second quarter. The approximate gross margin was 89.9% for 1H 2023 and 89.6% for 2Q 2023.
- Operating cash flow was negative US$32.4 million in 1H 2023, compared with positive US$4.6 million in 1H 2022. Investing cash flow was positive US$20.1 million, primarily from the Priority Review Voucher sale; financing cash flow was negative US$5.3 million.
- Cash and cash equivalents, including restricted cash, were US$194.1 million at June 30, 2023, versus US$208.7 million at December 31, 2022 and US$186.2 million at March 31, 2023.
- Current assets were US$278.6 million and current liabilities were US$65.0 million. Equity was US$200.4 million.
- Convertible bonds had a carrying value of approximately US$136.0 million, including the 3.00% convertible bonds due 2025. Lease liabilities totaled approximately US$34.2 million.
Material changes versus comparable periods
- RUCONEST revenue declined 3% in 1H 2023 year over year but recovered strongly in the second quarter, increasing 20% from 1Q 2023 and 2% from 2Q 2022. Management attributed the first-quarter weakness to temporary U.S. hereditary angioedema reimbursement disruptions.
- Joenja generated US$3.8 million in its first U.S. in-market quarter. At June 30, 60 patients had enrolled, with 43 patients on paid therapy.
- Operating costs rose to US$118.5 million from US$82.2 million in the prior-year first half. The increase included US$10.5 million of Joenja milestone payments, US$7.3 million of additional leniolisib-related costs, and US$16.3 million of higher payroll and general expenses.
- Other income included a US$21.1 million gain from selling the Rare Pediatric Disease Priority Review Voucher to Novartis. The prior-year period included a US$12.8 million gain related to Pharming’s reduced interest in BioConnection.
- Net finance results changed from a US$3.7 million gain in 1H 2022 to a US$4.5 million expense in 1H 2023, primarily due to foreign-exchange movements and interest expense.
Guidance, outlook, risks and unusual items
- Management continues to expect low single-digit annual revenue growth for RUCONEST, with quarterly fluctuations.
- Pharming expects a CHMP opinion on leniolisib in the fourth quarter of 2023. Subject to a positive opinion, European marketing authorization is expected approximately two months later; a U.K. filing is planned shortly thereafter.
- Canadian and Australian regulatory submissions were filed, with potential approvals targeted for the second quarter of 2024. An Israeli submission was filed, with a decision expected in the first half of 2024. Japan’s pediatric and adult development activities are ongoing.
- The company expects continued investment in Joenja commercialization, pediatric and Japanese approvals, additional indications, and business development. These investments are expected to continue weighing on profit during 2023.
- Management states that current cash, together with continuing RUCONEST and Joenja cash flows, should be sufficient to fund planned investments. No further specific 2023 financial guidance was provided.
- Under the Novartis license, Pharming may owe up to US$200 million in additional one-off milestone payments upon achievement of specified leniolisib sales levels and tiered royalties ranging from low-teens to high-teens percentages of net sales.
- Key risks include regulatory approval and timing, patient identification and reimbursement, clinical and development outcomes, commercialization costs, foreign-exchange exposure, liquidity requirements, and the ability to generate sufficient Joenja growth to offset increased operating expenses. The filing states that forward-looking statements are subject to material risks and uncertainties.
Facts investors should verify
- Whether Joenja patient enrollments, paid therapy conversions, reimbursement approvals, and revenue continue to grow after the initial U.S. launch.
- Whether RUCONEST maintains the expected low single-digit annual growth following the first-quarter reimbursement disruption.
- The timing and outcome of the CHMP review and subsequent European and U.K. launches.
- The cash-burn trajectory, including milestone payments, launch expenses, research and development spending, and working-capital needs.
- Potential future Novartis milestone and royalty obligations, as well as the maturity and terms of the 2025 convertible bonds.
- Progress of pediatric, Japanese, Canadian, Australian, Israeli, and additional-indication programs.
- The interim financial statements and reported figures remain unaudited.