- Delivered Revenue for the full year of €89.6 million (US$101.2 million) – an increase of 464% on 2016
- Record fourth quarter revenues from product sales of €32.7m (US$39.2 million) – up 26% compared to Q3
- Full year revenues from product sales were €88.7 million, up 547% up on 2016, reflecting the change from 30% supply price arrangements with a license partner to 100% direct sales in the USA, plus 156% underlying growth in product sales of RUCONEST®
- Full year operating profit of €21.9 million
- Full year net cash profits, including payments of interest but before one-off refinancing costs and non-cash adjustments, were €12.9 million
- €21.4 million of net cash generated in the fourth quarter alone
- Reported net loss of €80.0 million, reflecting one-off refinancing costs, and (non-cash) adjustments for contingent consideration and the fair value of the amortising and convertible bonds, mainly caused by the strong increase in sales and the share price respectively during 2017
- During 2018, we expect that the Company will again achieve a positive result.
Leiden, The Netherlands, 7 March 2018: Pharming Group N.V. (“Pharming” or “the Company”) (Euronext Amsterdam: PHARM) presents its preliminary (unaudited) financial report for the full year ended 31 December 2017.
The Company will hold a conference call at 13.00 CET/07.00 EST today. Dial in details can be found on page 12 of this report.
Chief Executive Officer Sijmen de Vries said:
“The remarkable growth reported in 2017 was a direct result of our strategic decisions to reacquire the commercial rights to RUCONEST® in North America and implement direct marketing in the major Western European markets. We successfully established the commercial infrastructure to support our existing patients and expand the patient population benefiting from RUCONEST®. As a result, we delivered 547% growth in revenues from product sales in one year and reported our first year of operating profitability. We also continued to invest in our long-term growth through the expansion of the improved delivery methods for RUCONEST®, as well as advancing our pipeline programs for Pompe disease and Fabry’s disease. We are confident that with our increasing patient reach and advancing pipeline, we will be able to continue to deliver significant value to our stakeholders.”
2017 was a transformational year for Pharming. We built strongly on the foundations of the successful reacquisition of commercial rights for RUCONEST® in North America and continued to develop the product in all key markets, growing product sales from €13.7 million in 2016 to €88.7 million in 2017, an increase of 547% and above analysts’ estimates. This reflects both the underlying increase in sales of RUCONEST® of 156% growth year on year and our increasing percentage of those sales (from 30% to 100%) as we move from supply price arrangements to making all sales in the USA ourselves.
This growth in the third and fourth quarter was partly driven by temporary shortages as result of manufacturing issues of certain competitor plasma-derived C1 esterase HAE therapies during this period, as outlined in our nine-month financial report for 2017 in October. According to recent reports from those competitors, the supply situation has stabilized during the fourth quarter.
In 2016 we committed to delivering operating profit in 2017, and I am delighted to say that not only did we achieve operating profits for the full year, but we were also profitable in every quarter. The total operating profit for the year was €21.9 million (2016: loss of €11.5 million), which represents an operating margin of more than 24%. This was achieved despite significant investments in providing support to patients during the stock outages of competitors, building up marketing and sales activities rapidly and intensifying research and development activities. In addition, we achieved net cash profits (defined as the net result excluding one-off refinancing charges and non-cash adjustments) of €12.9 million in total. The operating profit was subsequently reduced by the regular finance costs and also additional one-off charges relating to the refinancing conducted in May 2017 and adjustments relating to the contingent consideration as well as the amortizing bonds and the ordinary bonds (which were nearly all redeemed during the year) to produce a net loss. Since the year end, all of the remaining ordinary bonds have been redeemed and so this type of adjustment is not expected to occur beyond the first quarter of 2018.
As a result of the continued sales growth, we now believe that we are very likely to hit one or more of the sales-related milestone payments due to Valeant in the near future. Therefore, we have made a (non-cash) provision for additional fair value of the contingent consideration in the balance sheet, and a corresponding charge to the profit and loss account. The upside of this is that payment of the first milestone will not affect profits in the quarter when it is reached and paid. This reflects our strong confidence in the performance of our US commercial team and patients’ increasing confidence in the use of RUCONEST® as their therapy of choice to treat attacks of HAE.
The improvements in performance contributed to Pharming achieving significant value for its shareholders in 2017, with our share price appreciating by over 400% during the year.
Investing in sustainable long-term growth
At the end of 2016, we set out a clear strategy for growth based on creating an optimized sales infrastructure for our needs. During 2017 we delivered this strategy. We have built a full RUCONEST® sales force and full support functions and have materially increased patient and physician awareness resulting in strong sales of RUCONEST® in the US market. We now have a complete experienced HAE/rare disease sales force, an excellent medical science liaison team and an experienced and very capable management team expert in marketing, sales, commercial activity, market access and patient support.
We also began marketing in the major markets of Western Europe in earnest, making initial entries and good gains in France and the UK and continued growth in Germany, Austria and the Netherlands. As a result of all this, European direct sales grew strongly during the year, albeit from a low base.
Clear product differentiation
The HAE market is dynamic and product choice has increased and will continue to increase as new products enter the market for prophylaxis. RUCONEST® has a unique competitive advantage in that it remains the only product with the potential to be approved for both prophylaxis and treatment of attacks of HAE in the same dosage form. In order to increase the convenience of RUCONEST® for patients, we are also developing new forms of RUCONEST® with new routes of administration, including sub-cutaneous and intramuscular injection.
During the year we have also taken next steps in the initiation of clinical development for additional indications for RUCONEST®, including support for as-yet undisclosed Investigator Sponsored Studies. We have also brought forward our pipeline of products developed using our proprietary technology platform. The first of these new products; recombinant human α-glucosidase (enzyme replacement therapy for Pompe disease) is now expected to reach IND filing towards the end of 2018.
As a result of taking direct control of key EU and US markets, we now operate with an appropriate commercial presence in both Western Europe and the USA and can focus fully on delivering on our commitment to become a net earnings-generating company during 2018.
The support, expertise and hard work of all our employees makes Pharming what it is today. I would like to again take this opportunity to thank all Pharming employees as well as all of our investors, partners and debt providers for their support and commitment throughout 2017, which enabled us to execute on the commercial development of the Company to create a platform to deliver significant growth.
We look forward with confidence to accelerating the growth story of Pharming in 2018, with increasing sales, a new exciting pipeline and new opportunities for enhanced shareholder value.
Leiden, 7 March 2018
Sijmen de Vries
Chief Executive Officer and Chairman of the Board of Management