Operating profitability achieved, with a 794% increase in revenues from product sales, demonstrating the benefits of reacquiring RUCONEST® commercialisation rights in the US

Leiden, The Netherlands, 17 May 2017: Pharming Group N.V. (“Pharming” or “the Company”) (Euronext Amsterdam: PHARM) presents its (unaudited) financial report for the quarter ended 31 March 2017.

Operational highlights

  • Strategic decision to reacquire commercial rights to sell RUCONEST® in North America accelerated the delivery of operating profitability
  • On track with investment in US commercialization team
  • On schedule to complete transition of services from Valeant Pharmaceuticals International, Inc. in the second quarter
  • Positive EMA amendment to the marketing authorization in Europe to allow self-administration of RUCONEST® for HAE attacks with a new custom-designed RUCONEST® Administration Kit

Financial highlights

  • Net product sales increased by 794% to €15.2 million (2016: €1.7 million), mainly as a result of the combined effect of receiving all of the revenue from US product sales instead of the previous 30% supply share of net sales, as well as a significant underlying increase of US sales volumes.
  • Total revenues increased by 605% to €15.5 million (including €0.3 million of license revenue) from €2.2 million in 2016 (including €0.5 million in license revenue)
  • Operating results improved to a profit of €3.9 million from a loss of €3.2 million in 2016, and a loss of €11.5 million over the whole of 2016, despite a considerable increase in commercialization activities, especially in the US
  • The net result was a loss of €5.7 million, compared with a loss of €3.4 million in 2016, mainly as a result of non-cash financing expenses required to be shown under IFRS associated with the Amortising Convertible Bonds 2017/2018
  • The equity position improved from €27.5 million in December 2016 to €28.9 million at the end of March 2017, mainly due to the conversion of the early installments of the Amortizing Convertible Bond into shares and despite the net loss of €5.7 million
  • Inventories changed from €17.9 million in 2016 to €18.9 million in 2017, largely due to the need to cover the improving sales level in the US and to preparation for the launch of the self-administration kits in Europe, as well as raw materials for the new forms of RUCONEST® in development
  • Conversions by some bondholders during the quarter, together with scheduled repayments, meant that the amount of Amortizing Bonds outstanding prior to the refinance was reduced from €45.0 million to €36.6 million. No cash payment was required for the first installment of the Bonds due on 1 February 2017, only €125,000 was required for the second installment, paid on 1 March 2017, and €1.3 million was required for the third installment, paid on 31 March 2017.
  • The Company’s cash position decreased from €32.1 million at year-end 2016 to €27.6 million at 31 March 2017 (€27.5 million at 31 March 2016), largely due to delayed receipt of some trade payments for the quarter, which were received after the quarter end in April, balanced by the lower-than-expected cash installments paid on the Amortizing Bonds. If these trade payments had been received during the quarter, the cash position would have increased, showing positive net cash generation.

Post period highlights

  • The refinance of the Company’s debt by means of 48 months senior secured debt from Orbimed Advisors has enabled the Company to recover 115.0 million shares net of new warrants, which were previously reserved for conversion and/or repayment of the Amortizing Bonds due in 2018, and has eliminated the need to repay part of these Bonds in shares at a significant discount to the current market price
  • As expected, the refinancing will have a one-time negative impact on the net result for the second quarter as a result of the costs of the exercise as adjusted by the reversal of certain IFRS accounting entries in respect of the instruments which were refinanced. This will be rapidly recovered during the year as the benefits of the lower cash cost of debt and the recovery of the conversion shares, which could otherwise have been issued for less than the current market price of the Pharming shares, are realized
  • The refinancing is currently structured as a bridge facility, and is expected to be replaced by a full facility with Orbimed Advisors within 60 days. The transaction has had almost no effect on Pharming’s cash position as at the reporting date. For more details see the relevant press release dated Tuesday 16 May 2017 on the Company’s website at www.pharming.com

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