Earnings Release • Apr 30, 2015
Earnings Release
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Leiden, The Netherlands, 30 April 2015, Biotech company Pharming Group N.V. ("Pharming" or "the Company") (Euronext Amsterdam: PHARM) today published its (unaudited) financial report for Q1 2015 ended 31 March 2015.
scientific milestones set in the business plan, enhancing the IP portfolio, overseeing new product development and contributing to the overall strategic direction of the Company.
Sijmen de Vries, Pharming's CEO, commented: "Pharming's performance during the first quarter of 2015 has started to reflect some of the transformational changes made in 2014. In particular, we have seen the beginning of increasing and profitable Ruconest sales in the US following the product launch in November. Also as result of these US sales and the first sales from the direct commercialisation of Ruconest in the EU, no additional impairments of inventories were incurred this quarter. We therefore expect revenues and gross profits to improve due to markedly improved sales during the remainder of the year.
Revenues increased to €1.8 million (Q1 2014: €1.4 million), mainly as a result of product sales in the US.
Other license fee income amounted to €0.6 million (Q1 2014: €0.6 million). This license fee income reflects the release of accrued deferred license fees following receipt of €21.0 million upfront and milestone payments in 2010 and 2013 from Sobi, Salix and SIPI.
Cost of product sales in the first quarter of 2015 amounted to €1.0 million (Q1 2015: €0.9 million). In the first quarter of 2015 the Company incurred no additional inventory impairments (Q1 2014: €0.4 million), related to cost of goods exceeding the anticipated sales revenue for the product.
Gross profit increased by €0.6 million, from €0.2 million in the first quarter of 2014 to €0.8 million in the first quarter of 2015, mainly as a result of an improving "product mix", from sales in the US by our partner Salix, direct commercialisation by Pharming in Austria, Germany and Netherlands and no additional impairments of inventories.
Operating costs increased to €3.8 million from €3.3 million in the first quarter of 2014. The increase is a result of the increased (non-cash) share-based compensation, marketing & sales expenses for direct commercialization activities in the EU and costs for the new R&D sites in Schaijk and in France.
Research and Development costs remained unchanged compared to Q1 2014 and amounted to €2.7 million in the first quarter of 2015, General and Administrative costs increased to €0.9 million from €0.6 million in 2014 and Marketing and Sales costs amounted to €0.2 million. In 2014 no direct commercialisation of Ruconest took place.
As a result of the increase in gross profit which equaled the increase of operating costs, the operating loss of €3.0 million was in line with the first quarter of the previous year.
The 2015 net gain on financial income and expenses was €1.7 million, compared to a €13.0 million net loss on financial income and expenses in the first quarter of 2014. The financial income and expenses reflected the (noncash) revaluation of warrants and exchange rate effects on foreign currencies.
As a result of the above items, the net loss decreased by €14.7 million to €1.3 million in the first quarter of 2015 (Q1 2014: €16.0 million). The net loss per share for the first quarter of 2015 decreased to €0.003 (Q1 2014: €0.044).
Total cash and cash equivalents (including restricted cash) decreased by €4.1 million from €34.4 million at the end of 2014 to €30.3 million at the end of the first quarter 2015. The decrease follows from net cash outflows from operations of €4.0 million and investing activities of €0.1 million with net cash outflows from financing activities amounting to €0.4 million and positive exchange rate effects amounting to €0.5 million.
The Company's equity position amounted to €29.3 million at the end of the first quarter 2015 (31 December 2014: €29.8 million). In addition, it should be noted that the Company has a significant amount of deferred license fee income (Q1 2015: €11.7 million) regarding non-refundable license fees received in 2010 and 2013 which will be recognised in the statement of income over the term of the license agreements involved.
The number of outstanding shares as of 31 March 2015 is 408.1 million and the fully diluted number of shares is 477.2 million.
For 2015, the Company expects:
No financial guidance for 2015 is provided.
Pharming Group N.V. is developing innovative products for the treatment of unmet medical needs. Ruconest® (conestat alfa) is a recombinant human C1 esterase inhibitor approved for the treatment of angioedema attacks in patients with HAE in the US, Israel, all 28 EU countries plus Norway, Iceland and Liechtenstein.
Ruconest is commercialised by Pharming in Austria, Germany and the Netherlands.
Ruconest is distributed by Swedish Orphan Biovitrum AB (publ) (SS: SOBI) in the other EU countries and in Azerbaijan, Belarus, Georgia, Iceland, Kazakhstan, Liechtenstein, Norway, Russia, Serbia and Ukraine.
Ruconest is partnered with Salix Pharmaceuticals, Ltd. ("Salix") in North America. Valeant Pharmaceuticals International, Inc. (NYSE: VRX/TSX: VRX) completed its acquisition of Salix Pharmaceuticals, Ltd. on April 1, 2015.
Ruconest is also being investigated in a randomised Phase II clinical trial for prophylaxis of HAE and evaluated for various additional follow-on indications. Pharming has a unique GMP compliant, validated platform for the production of recombinant human proteins that has proven capable of producing industrial volumes of high quality recombinant human protein in a more economical way compared to current cell-based technologies. Leads for Enzyme Replacement Therapy (ERT) in Pompe, Fabry's and Gaucher's diseases are under early evaluation. The platform is partnered with Shanghai Institute of Pharmaceutical Industry (SIPI), a Sinopharm Company, for joint global development of new products. Pre-clinical development and manufacturing will take place at SIPI and are funded by SIPI. Pharming and SIPI initially plan to utilise this platform for the development of recombinant human Factor VIII for the treatment of Haemophilia A.
Additional information is available on the Pharming website: www.pharming.com.
This press release may contain forward-looking statements including without limitation those regarding Pharming's (the "Company") financial projections, market expectations, developments, partnerships, plans, strategies and capital expenditures.
The Company cautions that such forward-looking statements may involve certain risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive, political and (macro) economic factors, legal claims, the Company's ability to protect intellectual property, fluctuations in exchange and interest rates, changes in tax rates, changes in legislation and the Company's ability to identify, develop and successfully commercialise new products, markets or technologies.
As a result, the Company's actual performance, position and financial results may differ materially from the plans, goals and expectations set forth in such forward-looking statements. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates, unless required by law or regulations.
Sijmen de Vries, CEO: T: +31 71 524 7400
FTI Consulting Julia Phillips/ Victoria Foster Mitchell, T: +44 203 727 1136
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
| Amounts in €'000, except per share data | Q1 2015 |
Q1 2014 |
|---|---|---|
| License fees Product sales Revenues |
550 1,230 1,780 |
550 869 1,419 |
| Costs of product sales Inventory impairments Costs of sales |
(1,002) - (1,002) |
(866) (351) (1,217) |
| Gross profit | 778 | 202 |
| Other income | - | 33 |
| Research and development General and administrative Marketing and sales |
(2,712) (880) (232) |
(2,686) (606) - |
| Costs | (3,824) | (3,292) |
| Operating result | (3,046) | (3,057) |
| Financial income and expenses | 1,718 | (12,977) |
| Result before income tax | (1,328) | (16,034) |
| Income tax expense | - | - |
| Net result for the year from continuing operations | (1,328) | (16,034) |
| Net result for the year from discontinued operations | - | - |
| Net result for the year | (1,328) | (16,034) |
| Attributable to: Owners of the parent Non-controlling interests |
(1,328) - |
(16,034) - |
| Total net result | (1,328) | (16,034) |
| Basic earnings per share (€) from continuing operations | (0,003) | (0,044) |
| Amounts in €'000 | Q1 2015 |
Q1 2014 |
|---|---|---|
| Net result for the year |
(1,328) | (16,034) |
| Currency translation differences | 6 | - |
| Items that may be subsequently reclassified to profit or loss | - | - |
| Other comprehensive income, net of tax | - | - |
| Total comprehensive income for the year | (1,322) | (16,034) |
| Attributable to: Owners of the parent Non-controlling interests |
(1,322) - |
(16,034) - |
| Amounts in €'000 | 31 March 2015 |
31 December 2014 |
|---|---|---|
| Intangible assets | 764 | 777 |
| Property, plant and equipment | 5,389 | 5,598 |
| Restricted cash | 200 | 200 |
| Non-current assets | 6,353 | 6,575 |
| Inventories | 14,898 | 13,404 |
| Trade and other receivables | 2,374 | 1,554 |
| Restricted cash | - | - |
| Cash and cash equivalents | 30,125 | 34,185 |
| Current assets | 47,397 | 49,143 |
| Total assets | 53,750 | 55,718 |
| Share capital | 4,081 | 4,077 |
| Share premium | 282,385 | 282,260 |
| Other reserves | 42 | 36 |
| Accumulated deficit | (257,237) | (256,530) |
| Shareholders' equity | 29,271 | 29,843 |
| Deferred license fees income | 9,472 | 10,022 |
| Finance lease liabilities | 913 | 965 |
| Other liabilities | 7 | 15 |
| Non-current liabilities | 10,392 | 11,002 |
| Deferred license fees income | 2,200 | 2,200 |
| Derivative financial liabilities | 2,994 | 4,266 |
| Trade and other payables | 8,589 | 7,781 |
| Finance lease liabilities | 304 | 626 |
| Current liabilities | 14,087 | 14,873 |
| Total equity and liabilities | 53,750 | 55,718 |
| Amounts in €'000 | Q1 2015 |
Q1 2014 |
|---|---|---|
| Receipts from license partners, including product sales Receipt of Value Added Tax Interest received |
1,297 261 37 |
1,080 204 35 |
| Other receipts Payments of third party fees and expenses, including Value Added Tax |
- (2,175) |
122 (1,654) |
| Payments of manufacturing expenses Net compensation paid to (former) board members and (former) |
(1,976) | (3,381) |
| employees Payments of pension premiums, payroll taxes and social securities, net of grants settled |
(954) (524) |
(516) (451) |
| Net cash flows from operating activities | (4,034) | (4,561) |
| Purchases of property, plant and equipment Purchases of intangible assets |
(70) - |
- - |
| Net cash flows from investing activities | (70) | - |
| Proceeds of equity and warrants issued Payments of finance lease liabilities |
- (413) |
4,324 (139) |
| Net cash flows from financing activities |
(413) | 4,185 |
| Increase/(decrease) of cash | (4,517) | (376) |
| Exchange rate effects Cash and cash equivalents at 1 January |
457 34,385 |
- 19,152 |
| Total cash at 31 March | 30,325 | 18,776 |
| Of which restricted cash | 200 | 176 |
| Cash and cash equivalents at 31 March | 30,125 | 18,600 |
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