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Pharming Group N.V.. (8/23/12). "Press Release: Pharming Reports on Financial Results First Half Year 2012". Leiden.

Organisations Organisation Pharming Group N.V.
  Group Pharming (Group)
  Organisation 2 Transmedic Pte. Ltd.
Product Product Rhucin®
Persons Person de Vries, Sijmen (Pharming 200810– CEO before 4-Antibody CEO before Morphochem before Novartis + SKB)
  Person 2 Keegan, Karl (Hox Therapeutics 201811– CEO before Atlantic Healthcare + Vectura Group + Pharming + Shield Therapeutics)

Biotech company Pharming Group NV ("Pharming" or "the Company") (NYSE Euronext: PHARM) today published its financial report for the first half year ended June 30, 2012.


> Revenues and other income increased to €1.9 million (H1 2011: €1.4 million)

> Operating costs from continuing operations increased to €12.3 million (H1 2011: €9.1 million). Total net loss from continuing operations increased to €16.6 million (H1 2011: €8.6 million) mainly as a result of non-cash charges, including €4.9 million in costs associated with the December 2011 €8.4 million convertible bond, inventory impairments of €2.8 million and impairment charges of €1.2 million in relation to the closure of the US-based cattle operations

> Cash outflows from operations decreased to €8.2 million (H1 2011: €8.9 million)

> Cash at the end of the first half year of 2012 decreased to €3.4 million (2011 year end: €5.1 million) The negative equity position of €1.2 million at year end 2011 increased to a negative equity position of €8.2 million

> Post the reporting period (August 1, 2012) the Company announced it had secured an equity working capital facility with institutional investors of up to €10.0 million for a two year term.


> Ongoing pivotal clinical trial for Ruconest®, Study 1310, remains on track and is expected to be completed by the end of the third quarter of 2012, with the read-out of the top-line results soon thereafter

> New agreements signed with Transmedic Pte Ltd. for the commercialization of Ruconest® inBrunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand and with Hyupjin Corporation for the Republic of Korea

> Commenced an open-label Phase II clinical study evaluating Ruconest® for the treatment of acute attacks of angioedema in pediatric patients with HAE

> Positive study results published in peer-reviewed journal Biodrugs demonstrated that recombinant human C1 inhibitor was not observed to have a prothombotic effect when used to treat acute HAE attacks

> Post the reporting period (August 2, 2012) the Company announced a strategic restructuring plan of its Dutch operations

Sijmen de Vries, CEO, commented: "The first half of 2012 has been a challenging period for Pharming, marked by the unexpected delay in the read out of Study 1310, as reported in June. However, the proposed restructuring, whilst regrettable, will allow Pharming to adopt a lean, efficient business model. We believe that the new structure, in the context of the current financing climate for small cap biotechs, is essential to Pharming's future success .We have also recently secured a €10 million equity working capital facility which should enable us to complete Study 1310 by the end of September and to analyse the results in the weeks following. In addition we are evaluating additional financing options going forward. The successful outcome of this study will trigger a US$10.0 million milestone payment by our partner Santarus, followed by a further US$5.0 million on the acceptance of the BLA for review by the US FDA. We look forward to updating the market on these events and on our ongoing discussions with potential partners for our protein pIatform."


In the six months to June 30, 2012 the Company generated revenue and other income from continuing operations of €1.9 million (H1 2011: €1.4 million). This increase stems from Ruconest® sales of €0.8 million (up from €0.3 million in H1 2011). Costs of revenues amounted to €0.8 million (H1 2011: €1.1 million) with impairments on inventories previously reserved for sales amounting to €2.2 million (H1 2011: nil).
Total operating costs from continuing operations increased by €3.2 million from €9.1 million in the first half year of 2011 to €12.3 million in the same period of 2012. The increase reflects non-cash items such as second quarter 2012 impairment charges related to the US-based cattle platform operations (€1.2 million), impairments on inventories reserved for research and development activities (€0.6 million) and cash related items such as the Company's activities in relation to Study 1310 required for US regulatory approval for Rhucin®. Successful completion of this study will trigger a US$10.0 million milestone payment by Santarus. In addition, the Company anticipates submitting a BLA filing approximately three months thereafter with another US$5.0 million due from Santarus as and when the U.S. Food and Drug Administration accepts the BLA filing for review.

Early in 2012 the Company finalized a transaction announced in December 2011 under which it issued €8.4 million convertible bonds plus 38,717,484 warrants. The bonds had to be repaid in six monthly instalments and could be settled in cash and/or in shares. To date the bonds have been fully repaid; all instalments plus interest were in shares with the number of shares based on volume weighted average price, a reference period minus a discount. With regards to these pay-backs in shares, the Company issued a total of 174,925,970 shares until the end of the first half of 2012. In addition to results on derivative financial liabilities, these items largely accounted for a substantially non-cash net loss in financial income and expense of €3.2 million as compared to a €0.2 million net profit on financial income and expenses in the comparative period of 2011.

As a result of the above items, net loss from continuing operations increased by €8.0 million to €16.6 million in H1 2012 (H1 2011: €8.6 million). Due to a one-time €0.6 million profit on discontinued operations in the first half of 2011, which followed liquidation and deconsolidation of the DNage business early in 2011, total net loss increased from €8.0 million to €16.6 million. The net loss per share for the first half year of 2012 amounted to €0.03 (H1 2011: €0.02).


Total cash and cash equivalents (including restricted cash) decreased by €1.7 million from €5.1 million at year end 2011 to €3.4 million at the end of the first half year 2012.

As explained in the financial results section, the Company has recently closed on an €10 million Equity Working Capital Facility and is evaluating additional options for financing going forward. In addition, the Company anticipates receiving US$10.0 million from Santarus upon the successful outcome of Ruconest®'s Study 1310 in Q4 2012 and another US$5.0 million as and when the U.S. Food and Drug Administration accepts the BLA filing for review. Receipts of these milestones and equity financing are expected to significantly improve the Company's cash and equity position.


In December 2011 the Company announced that it had entered negative equity. This negative equity position of €1.2 million at year end 2011 increased by €7.0 million to €8.2 million and mainly reflects the €16.6 million net loss for the first half year 2012, net of €9.4 million posted for shares issued as a repayment of convertible bonds (€9.1 million) and other payments in shares (€0.3 million).

The negative equity position has in itself no immediate impact on the execution of Pharming's business plan, nor does it imply that the Company is legally required to issue new share capital. However, the Company is considering various options in order to reduce the negative equity and return to a positive equity position.

Pharming is continuously reviewing its financial and liquidity position and has various options to improve its equity standing under International Financial Reporting Standards (IFRS). Notably, the Company reports that the negative equity position was mainly caused by the inability to recognize the €19.7 million upfront payments and milestones received from Sobi and Santarus as equity (at June 30, 2012 the deferred license fees income amounted to €16.4 million; if release to the statement of income would have been permitted under IFRS, the Company would have reported a positive equity position of €8.2 million). Anticipated receipt of the two development milestones associated with the successful read out of Study 1310 (US$10.0 million) and acceptance of the BLA filing by the FDA (US$5.0 million) will, under IFRS, be recognized immediately and thus augment the equity position.


Pharming is conducting a Phase III clinical study with RUCONEST® under a Special Protocol Assessment (SPA) that is intended to support the submission of a Biologics License Application (BLA) to the U.S. Food and Drug Administration (FDA). Ruconest is being evaluated for the treatment of acute attacks of angioedema in patients with HAE in an international, multicenter, randomized, placebo-controlled Phase III study at a dosage strength of 50 U/kg with a primary endpoint of time to beginning of relief of symptoms. Santarus has licensed certain exclusive rights from Pharming to commercialize Ruconest in North America for the treatment of acute attacks of HAE and other future indications. Under the terms of the license agreement, a $10 million milestone is payable to Pharming upon successful achievement of the primary endpoint of the Phase III clinical study. The study is expected to be completed by the end of the third quarter of 2012.

About Ruconest® and Hereditary Angioedema

Ruconest® (INN conestat alfa) is a recombinant version of the human protein C1 inhibitor (C1INH). Ruconest is produced through Pharming's proprietary technology in the milk of transgenic rabbits and is approved in Europe for treatment of acute angioedema attacks in patients with HAE. RUCONEST® is an investigational drug in the U.S. and has been granted orphan drug designation for the treatment of acute attacks of HAE, a genetic disorder in which the patient is deficient in or lacks a functional plasma protein C1 inhibitor, resulting in unpredictable and debilitating episodes of intense swelling of the extremities, face, trunk, genitals, abdomen and upper airway. The frequency and severity of HAE attacks vary and are most serious when they involve laryngeal edema, which can close the upper airway and cause death by asphyxiation. According to the U.S. Hereditary Angioedema Association, epidemiological estimates for HAE range from one in 10,000 to one in 50,000 individuals.

About Pharming Group NV

Pharming Group NV is developing innovative products for the treatment of unmet medical needs. Ruconest® is a recombinant human C1 inhibitor approved for the treatment of angioedema attacks in patients with HAE in all 27 EU countries plus Norway, Iceland and Liechtenstein, and is distributed in the EU by Swedish Orphan Biovitrum (OMX: SOBI). Ruconest® is partnered with Santarus, Inc (NASDAQ: SNTS) in North America where the drug is undergoing Phase III clinical development. The product is also being evaluated for follow-on indications in the areas of transplantation and reperfusion injury. The advanced technologies of the Company include innovative and validated platforms for the production of protein therapeutics, technology and processes for the purification and formulation of these products. A feasibility study, using the validated transgenic rabbit platform, aimed at the development of recombinant Factor VIII for the treatment of Haemophilia A is underway with partner, Renova Life, Inc. Additional information is available on the Pharming website, To download the Pharming Group Investor Relations App, click here.

This press release contains forward looking statements that involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from the results, performance or achievements expressed or implied by these forward looking statements.

Sijmen de Vries, CEO: T: +31 (0)71 524 7400

FTI Consulting
Julia Phillips/ John Dineen, T: +44 (0)207 269 7193

Conference call information
Today, Chief Executive Officer Sijmen de Vries will discuss the first half 2012 results in a conference call for 09:30 am (CET). To participate, please call one of the following numbers 10 minutes prior to the call:

From the Netherlands: 31 (0) 45 6316902
From the UK: 44-207-153-2027


Discussion of financial position and financial results

Pharming's net loss for the first six months of 2012 amounted to €16.6 million compared to €8.0 million in the same period of 2011. The €8.6 million increased loss is largely explained by non-cash impairment charges of €4.0 million in total on inventories and property, plant and equipment incurred in the first half of 2012; these impairment charges stem from a closure of the US-based cattle operations (€1.2 million) and a write-off of inventories previously reserved for sales and (pre)clinical use (€2.8 million). In addition, interest and settlement charges of €4.9 million associated with a convertible bond instrument signficantly contributed to the net loss. As a result of the issue of shares valued at €9.4 million, the impact of the €16.6 million net loss on equity was partially offset and negative equity increased from €1.2 million at the start of 2012 to €8.2 million at June 30, 2012. At the same time, the Company's cash position (including restricted cash) decreased by €1.7 million from €5.1 million at year end 2011 to €3.4 million at the end of the first half year 2012; cash flows used in operating and investing activities of in total €8.2 million were largely offset with net financing cash inflows of €7.1 million (of which €8.0 million proceeds of convertible bonds issued).

During the second half of 2012, the Company's main focus will be on the completion of the ongoing US Phase III study and the subsequent submission of the BLA to the US FDA. Business development will be focused on identifying additional partners for the commercialisation of Ruconest in the remaining territories and on continuing discussions with potential outlicensing partners for the protein pIatform.

Auditor's involvement
The content of these condensed consolidated interim financial statements has not been audited or reviewed by an external auditor.

Risks and uncertainties
Note 32 on pages 88-91 of the Annual Report 2011 include an extensive overview of the Company's (financial) risk management.

With reference to the Going Concern Assessment in Note 2 of the condensed consolidated interim financial statements for the half year ended June 30, 2012, Pharming will - both for the second half of 2012 and the period beyond - focus on managing liquidity risk through generating sufficient cash income to fund its operations.

Responsibility statement
The Board of Management of the Company hereby declares that to the best of their knowledge, the condensed consolidated interim financial statements, which have been prepared in accordance with IAS 34 (Interim Financial Reporting), give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole, and the Interim Report of the Board of Management gives a fair review of the information required pursuant to section 5:25d(8)/(9) of the Dutch Financial Markets Supervision Act (Wet op het Financieel toezicht).

Leiden, August 22, 2012
Board of Management

B.M.L. Giannetti, Chief Operations Officer
K.D. Keegan, Chief Financial Officer
S. de Vries, Chief Executive Officer

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Record changed: 2019-06-09


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