Scienza e Tecnologia
Pharming Group reports financial results for full year 2021
LEIDEN, The Netherlands , March 17, 2022 /PRNewswire/ -- Pharming Group N.V. ("Pharming" or "the Company") (Euronext Amsterdam: PHARM/NASDAQ: PHAR) presents its preliminary (unaudited) financial report for the full year ended December 31, 2021 .
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Pharming Group N.V. is a global, commercial stage biopharmaceutical company developing innovative protein replacement therapies and precision medicines for the treatment of rare diseases and unmet medical needs.
The flagship of our portfolio is our recombinant human C1 esterase inhibitor (rhC1INH) franchise. C1INH is a naturally occurring protein that down regulates the complement and contact cascades in order to control inflammation in affected tissues.
Our lead product, RUCONEST®, is the first and only plasma-free rhC1INH protein replacement therapy. It is approved for the treatment of acute hereditary angioedema (HAE) attacks. We are commercializing RUCONEST® in the United States , the European Union and the United Kingdom through our own sales and marketing organization, and the rest of the world through our distribution network.
In addition, we are investigating the clinical efficacy of rhC1INH in the treatment of further indications, including pre-eclampsia, acute kidney injury and severe pneumonia as a result of COVID-19 infections.
We are also studying our oral precision medicine, leniolisib (a phosphoinositide 3-kinase delta, or PI3K delta, inhibitor), for the treatment of activated PI3K delta syndrome, or APDS. World-wide rights for leniolisib were licensed from Novartis AG in 2019. Leniolisib met both of its primary end points in a registration enabling Phase 2/3 study in the United States and Europe . We are targeting global regulatory filings for leniolisib from Q2 2022 onwards.
Additionally, we entered into a strategic collaboration with Orchard Therapeutics to research, develop, manufacture and commercialize OTL-105, a newly disclosed investigational ex-vivo autologous hematopoietic stem cell (HSC) gene therapy for the treatment of HAE.
Furthermore, we are leveraging our transgenic manufacturing technology to develop next-generation protein replacement therapies, most notably for Pompe disease, which is currently in preclinical development.
We continue to closely monitor and manage the key risks and opportunities, and will respond appropriately to any emerging risk. We will issue a full overview of our risk profile in our Annual report 2021 to be published on April 6th, 2022 .
There are no material changes in the nature, scope, and (relative) scale in this reporting period compared to last year.
The Condensed Consolidated Interim Financial Statements have not been audited by the Company's statutory auditor.
Sijmen de Vries, CEO: T: +31 71 524 7400
Susanne Embleton , Investor Relations Manager: T: +31 71 524 7400 E: investor@pharming.com
Victoria Foster Mitchell / Alex Shaw
T: +44 203 727 1000
Jim Polson
T: +1 (312) 553-6730
Leon Melens
T: +31 6 53 81 64 27
E: pharming@lifespring.nl
Netherlands (Local) 085 888 7233
United Kingdom 0800 640 6441
United Kingdom (Local) 020 3936 2999
United States (Local) 1 646 664 1960
All other locations +44 20 3936 2999
https://webcast.openbriefing.com/pharming-fy21/
Following several years of increasing profitability, during 2021 we undertook a number of strategic steps to support long-term growth, including significant investment to expand our commercial business and pipeline. These investments were possible due to the continuing strong sales performance of our lead product, RUCONEST®, for the treatment of acute hereditary angioedema (HAE).
In line with our strategy, we have continued to expand the global reach of patients benefiting from RUCONEST®, with increasing patient enrollment and product demand, despite increasing competition and the impact of COVID-19 in early 2021 on sales and marketing activities, and patient hospitals visits. In terms of our global commercial footprint for RUCONEST®, we entered Spain and secured a distribution agreement with NewBridge Pharmaceuticals for several North-African and Middle-Eastern territories. Lastly, due to the strong sales performance of RUCONEST®, we were able to pay a final US$25 million installment to Bausch Health as agreed as part of the re-acquisition of US commercial rights to the product in 2016. With a continued need for safe and reliable acute treatment options for HAE, despite an increase in prophylactic treatment options, we remain confident in the ongoing demand for RUCONEST®.
Importantly, we have focused on the development of our late-stage asset, leniolisib, which we in-licensed from Novartis in 2019. Following the successful completion of patient enrollment in the pivotal Phase II/III study of leniolisib for the treatment of activated phosphoinositide 3-kinase delta (PI3Kδ) syndrome (APDS) in June 2021 , we focused on increasing our investment in launch preparations for the product. This included entering into a collaboration with Invitae Corporation (NYSE: NVTA, "Invitae"), a leading medical genetics company, to launch a sponsored genetic testing program, navigateAPDS, designed to assist clinicians in identifying patients and their family members with APDS. The program offers eligible patients suffering from primary immunodeficiency diseases free-of-charge genetic testing to confirm an APDS diagnosis, which may lead to earlier diagnosis.
Our investment in leniolisib was validated in January 2022 with the publication of positive top-line data from the pivotal trial, which met both co-primary endpoints and demonstrated the clinical efficacy of leniolisib over placebo. We now plan to begin to submit global regulatory filings for leniolisib to the US Food and Drug Administration, the European Medicines Agency and the UK Medicines and Healthcare products Regulatory Agency starting in Q2 2022. Further clinical work will be undertaken in pediatric populations and a registration-enabling study for Japan to grow the potential market for leniolisib. We also expect continued significant investment in launch preparation for the product, which is anticipated from Q1 2023 onwards, dependent on regulatory approval. Importantly, given the small specialist prescribing base, we are able to leverage our existing commercial infrastructure for RUCONEST® in HAE for the commercialization of leniolisib in APDS. We look forward to diversifying our commercial portfolio with the launch of our second product.
Also in line with our strategy to leverage our in-house expertise, we signed a strategic collaboration with Orchard Therapeutics, a global gene therapy leader, to research, develop, manufacture and commercialize OTL-105, a newly disclosed investigational ex-vivo autologous hematopoietic stem cell (HSC) gene therapy for the treatment of hereditary angioedema (HAE). This partnership reinforces our long standing commitment to HAE patients and treating physicians to provide a potential cure for the disease.
Also as part of the diversification of our asset base, we refocused efforts away from several internal early-stage projects, including the building of our own Drug Substance Processing plant for RUCONEST®, as we were able to continue our manufacturing contract with Sanofi for another five years, with options for further extensions. These decisions meant that we impaired past investments for an amount of US$5.4 million , but will be saving planned capital expenditures of well over US$40 million going forward.
Lastly, we have invested in our compliance and internal control systems and saw increased insurance costs. The Company believes that this increase, necessitated by Pharming's additional Nasdaq listing, is likely to be offset by the benefits of expanded access to capital that this US listing provides. We have therefore entered 2022 on a solid footing, which will allow us to make further investments as we prepare for our next stage of growth, including our continued strategy for licensing or acquiring additional late-stage assets for unmet medical needs in rare or ultra-rare diseases to further accelerate our growth trajectory. This is supported by a strong balance sheet and bolstered by US$40 million in saved capital expenditures and access to US capital markets.
In 2021 there was no impact on the upscaling or continued production of RUCONEST® and leniolisib, and no impact on the availability or distribution of RUCONEST® to HAE patients as a result of the pandemic, which has continued into 2022. Throughout the year, we continued to comply with international guidance and requirements across our operations to prioritize the health and safety of our employees. Over the course of the year we experienced impacts on our sales and marketing activities, delay in clinical development across our existing pipeline, and supply chain disruptions for manufacturing consumables.
2021 marked a transformational year for our Executive Committee and Board of Directors. Anurag Relan became Chief Medical Officer following the departure of Bruno Giannetti , Robert Friesen was hired as Chief Science Officer, and Ruud van Outersterp became Chief Ethics and Compliance Officer following the departure of Anne-Marie de Groot . Upon nomination by the Board of Directors, Steven Baert , Leon Kruimer , and Jabine van der Meijs were appointed Non-Executive Directors to the Board at the Company's Annual General Meeting of Shareholders in May of 2021.
In addition to these Executive and Board appointments, we have recruited a number of experienced new colleagues across the business during the year, to expand our existing capabilities to support future growth. Pharming's headcount (FTE) at the end of 2021 was 300, an increase of 71 compared to the end of 2020.
These changes come at an important time in the Company's evolution as we build a sustainable business and create long-term value for all our stakeholders.
In 2021, Pharming's revenues decreased by 6% to US$198.9 million and operating profit decreased by 82% to US$13.6 million . Net profit decreased by 58% to US$16.0 million . This section will further elaborate on Pharming's financial performance in 2021.
The decrease in revenues was primarily a result of lower sales of RUCONEST® in the US market ( US$193.4 million in 2021 compared to US$202.7 million in 2020). In the US, there was a surge in COVID-19 cases at the end of 2020 and into 2021, which led to some patients pre-filling of RUCONEST® prescriptions in Q4 2020. It also resulted in the temporary closure of the majority of physician offices, causing a reduction in routine and diagnostic patient visits and a slowdown of annual renewals of prescriptions. The combination of these factors led to lower prescription refill rates by patients still using their additional RUCONEST® stock from Q4 2020 and a reduction in new patient enrollments in the first part of Q1 2021. During the remainder of the year, these trends were reversed, with a significant increase in new patient enrollments.
Revenues in Europe decreased to US$4.9 million in 2021 (from US$8.2 million in 2020). This decrease was mainly caused by phasing of ordering. Pharming continues to build its EU commercial infrastructure and expand into new territories. Revenue in Rest of the World (excluding Europe ) decreased to US$0.5 million (from US$1.3 million in 2020).
Cost of sales decreased by 10% from US$23.5 million in 2020 to US$21.1 million in 2021. Costs of sales related to product sales in 2021 amounted to US$19.1 million (2020: US$23.5 million ). The remainder of costs in 2021 ( US$2.0 million ) stems from impairment charges on inventory designated for commercial activities. No such impairment charges were applicable for 2020.
Gross profit decreased US$10.9 million , or 6%, from US$188.6 million for the year ended 31 December 2020 to US$177.7 million for the year ended 31 December 2021 . The main reasons for this decrease were the reduction in sales in the US and EU and accompanying decrease in cost of sales.
Other operating costs increased to US$166.8 million for the year ended 31 December 2021 from US$114.2 million for the year ended 31 December 2020 . This cost increase of US$52.6 million caused operating profit for the year 2021 to decrease by 82% to US$13.6 million , from US$76.3 million in 2020.
The costs for 2021 increased mainly due to investments in Pharming's long term growth. Key elements are significant investments in the pipeline, including one-off costs of the upfront payment of US$13.1 million to in-license OTL-105 from Orchard Therapeutics and pre-launch marketing preparations and manufacturing costs for leniolisib ( US$11.6 million ). The organization was enhanced to support growth, so employee numbers increased ( US$8.2 million ). Insurance costs increased due to the Nasdaq listing ( US$5.5 million ).
In addition, impairment losses on tangible and intangible assets were realized: US$5.4 million from the cancelled downstream production plant and US$4.8 million related to the cancelled development of RUCONEST® in a more convenient form for patients.
Other finance income increased by US$14.2 million , from US$0.7 million for the year ended 31 December 2020 to US$14.9 million for the year ended 31 December 2021 . This increase was primarily due to the significant increase in the US dollar versus the Euro during 2021. Significant favorable currency effects ( US$14.8 million ) were incurred on the cash balances in US dollars.
Other finance expenses decreased by US$27.1 million , from US$33.3 million for the year ended 31 December 2020 to US$6.2 million for the year ended 31 December 2021 . This decrease was primarily due to the significant increase in the exchange rate of the US dollar versus the Euro during 2021, as mentioned in finance income. Furthermore, in 2020 settlement fees and expenses of US$4.3 million were paid back and extinguished the loan from Orbimed Advisors completely. In 2021, no settlement fees were paid. Finally, the final milestone of the contingent consideration which formed part of the re-acquisition transaction for North American commercial rights for RUCONEST® was triggered in Q4 2020, with the relating finance expenses of US$3.7 million . No such expenses are applicable for 2021.
Income tax expense increased US$0.8 million from US$6.3 million for the year ended 31 December 2020 to US$7.1 million for the year ended 31 December 2021 , despite a lower profit before tax for the year 2021 compared to 2020. The increase is caused by increased foreign tax rate differential ( US$1.4 million ), increased changes in non-taxable income ( US$1.7 million ), increased changes in statutory applicable tax rate affecting the deferred tax expense ( US$2.3 million ) and other smaller differences ( US$0.7 million ). These increases are offset by a lower taxable income ( US$5.3 million ).
Total net profit in 2021 of US$16.0 million represented a decrease of 58% over 2020 ( US$37.7 million ). The decrease is mainly caused by an increase in operating costs, due to company growth, investments in Pharming's product pipeline and impairment charges on the cancelled downstream production facility. These increased costs are partly offset by favorable currency exchange effects.
In 2021, intangible assets decreased by US$10.2 million from US$94.1 million in 2020 to US$83.8 million in 2021. The decrease is caused by regular amortization ( US$4.1 million ), impairment charges ( US$5.1 million ) and foreign currency effects ( US$7.1 million ), partly offset by investments in assets ( US$6.0 million ).
This relates to regular amortization of the re-acquired rights related to the acquisition of all North American commercialization rights from Bausch Health in 2016 and the acquisition of all European commercialization and distribution rights from Swedish Orphan International AB ("Sobi") in 2020. Amortization is charged based on the economic lifetime of the intangible asset. The economic lifetime of the North American commercialization rights from Bausch Health is 20 years, where the economic lifetime of the European commercialization and distribution rights from Swedish Orphan International AB is 12 years. This estimate did not change compared to previous year.
In 2018, the Company started to modify the current product RUCONEST® for more convenient forms of administration for use by the patient. This was expected to have resulted in better variants of the existing product. A total amount of US$4.6 million for the new variant prioritized version has been recognized as an internally generated intangible asset as at 31 December 2019 . In 2020, the Company incurred development costs of US$0.2 million , while in 2021 no costs were incurred given a re-prioritization of the effort invested in the Company's pipeline assets. The cost of the asset has been fully impaired in 2021 as the development program of the variant has been hibernated, resulting in an impairment charge of US$4.8 million .
In 2014, the Company acquired assets from Transgenic Rabbit Models SASU, for a total amount of US$0.5 million , which was recognized as intangible assets related to development costs of two new product leads: alpha-glucosidase for Pompe disease and alpha-galactosidase for Fabry's disease. Given a re-prioritization of the effort invested in the Company's pipeline asset, the board of directors decided to fully impair the asset relating to alpha-galactosidase for Fabry's disease, resulting in an impairment charge of US$0.3 million .
Investments in intangible assets relate to software and the Novartis license.
Assets acquired related to software ( US$3.4 million ) mainly relate to the implementation of Pharming's new ERP system SAP S/4HANA. The new ERP system was implemented and operational as of January 1st, 2022 and hence no amortization charges are applicable for 2021.
In 2021, the Company paid US$2.6 million to Novartis for additional development. In August 2019 , Pharming entered into a development collaboration and license agreement with Novartis to develop and commercialize Leniolisib, a small molecule phosphoinositide 3-kinase delta (P13Kδ) inhibitor being developed by Novartis to treat patients with Activated Phosphoinositide 3-kinase Delta Syndrome ("APDS"). The asset is not subject to amortization during 2021. Amortization will start when leniolisib is approved for commercialization.
Property, plant and equipment increased from US$12.2 million for the year ended 31 December 2020 to US$13.2 million for the year ended 31 December 2021 . In 2021, the Company had capital expenditures of US$10.7 million (2020: US$4.7 million ), mainly related to new production facilities and machinery and equipment. As a result of our renewed strategic manufacturing partnership with long-term manufacturing partner Sanofi S.A., and following careful consideration, specifically regarding recently significantly increased fit-out costs, the Company decided to have the construction of the new building completed, but no longer pursue the realization of its own downstream production capacity at Pivot Park in Oss. Pharming will continue to use the building under construction for alternative purposes. This decision resulted in an impairment of capitalized fit-out costs in assets under construction of US$5.4 million . Of this amount, a total US$4.4 million is part of investments in 2021. The remainder of the increase is partly offset by regular depreciation ( US$3.2 million ) and foreign currency effects US$0.9 million .
The right of use assets increased by US$10.5 million to US$19.9 million per the year ended 31 December 2021 (2020: US$9.4 million ). Investments ( US$14.2 million ) in 2021 primarily relate to new lease contracts for our operational facilities in the Netherlands . These investments are partly offset by regular depreciation ( US$2.8 million ) and foreign currency effects ( US$0.9 million ).
Inventories increased from US$21.2 million for the year ended 31 December, 2020 to US$27.3 million for the year ended 31 December 2021 , largely due to an increase in work in progress inventory anticipating sales growth.
Cash and cash equivalents, together with restricted cash decreased to US$193.0 million at the year end 2021, compared with US$206.7 million for the year ended 31 December 2020 . This was as a result of positive cash flows from operating activities of US$37.8 million remaining after the US$13.1 million one- off payment to Orchard Therapeutics and reduced by investments and negative financing cash flows totaling US$49.3 million . These US$49.3 million include investments in production facilities and the payment of the final US$25.0 million milestone to Bausch Health Inc. in Q2 2021 in relation to the re-acquisition of the North American RUCONEST® commercialization rights in 2016.
The equity position increased by US$9.5 million from US$183.4 million for the year ended 31 December 2020 to US$192.9 million for the year ended 31 December 2021 , mainly due to the changes in the net result achieved by Pharming ( US$16.0 million ) and transactions recognized directly in equity, relating to share based compensation and exercised options ( US$10.6 million ), partly offset by other comprehensive income relating to currency translation reserve US$15.1 million and fair value changes on investments designated as fair value with changes through other comprehensive income US$2.3 million .
The convertible bond value has decreased by US$10.9 million to US$140.9 million at the year end 2021, coming from US$151.8 million as per 31 December 2020 . This is mainly caused by foreign currency effects of US$11.7 million , which is partly offset by amortization of transactions costs ( US$0.8 million ). During 2021, a total of US$4.4 million of interest was paid.
Lease liabilities increased by US$10.7 million from US$10.2 million as per 31 December 2020 to US$20.9 million per 31 December 2021 . The increase is mainly due to new lease contracts for our operational facilities in the Netherlands ( US$14.1 million ), partly offset by monthly or quarterly lease payments ( US$3.2 million ). The remainder relates to regular accrued interest expenses and foreign exchange effects.
Other financial liabilities decreased by US$25.0 million during 2021, which is caused by the full repayment of the final US$25.0 million milestone to Bausch Health Inc. in Q2 2021 in relation to the re-acquisition of the North American RUCONEST® commercialization rights in 2016 (contingent consideration).
For 2022, the Company anticipates:
No further specific financial guidance for 2022 is provided.
For the year ended 31 December 2021
These statements are not part of the original Interim Financial Statements. The original Interim Financial Statements are reported in US Dollars. In case of differences of interpretation between the Financial Statements in US dollars and the Financial Statements in Euros, the Financial Statements in US Dollars will prevail.