LEIDEN, The Netherlands,
July 28, 2016 /PRNewswire/ --
Pharming Group N.V. ("Pharming" or "the Company") (Euronext
Amsterdam: PHARM) announces its (unaudited) financial report for
the six months ended 30 June
2016.
The Company will hold a conference call at 10:00 CET today, dial-in details can be found on
page 7.
Highlights
- Sales of RUCONEST® up 63% overall in second quarter relative to
first quarter, so that sales in the first half of 2016 sales were
slightly ahead of the first half of 2015
- Sales in the USA up by
approximately 33% in the second quarter compared with the first
quarter
- Gross Profit increased by 14% for the half year compared with
the first half of 2015
- Strongly Positive Results from Phase II study of RUCONEST® for
prophylaxis of HAE
- Pharming agrees to market RUCONEST directly in 21 more EU and
Middle East countries in amendment
with SOBI
CEO's Commentary
After a relatively modest start to sales of RUCONEST®
(recombinant C1 esterase inhibitor, 50 IU/kg) in 2016, sales trends
during the second quarter improved again. More consistent sales
efforts in the US, recovering from the impact of a significant
reorganization of the Valeant sales force in Q4 2015, and a modest
expansion in our EU direct commercialization efforts drove these
improvements. Pharming is continually looking for ways to improve
sales performance in the USA and
the rest of the world in cooperation with our partners.
Income from sales increased 63% from €1.6 million in the first
quarter to €2.6 million in the second quarter, with sales in the
USA up from €1.5 million in the
first quarter to €2.0 million in the second quarter. This
represents a good half year, and exceeds the first half of 2015
when the major wholesalers in the USA were ramping up their stocking levels of
RUCONEST® to meet increasing demand. Gross profits from sales
continue to increase as well; from €1.6 million in the first
quarter to €1.7 million in the second quarter of 2016 as result of
the changing mix between US sales and sales in the EU by Swedish
Orphan Biovitrum ("SOBI") and by Pharming. We continued to
keep pressure on cash expenditure despite the improvement,
resulting in resource management improvement in the first half of
2016 compared with the first half of 2015.
During March, the European Commission adopted the CHMP
recommendation to include the treatment of hereditary angioedema
("HAE") attacks in adolescents and to remove the requirements for
rabbit IgE testing that previously formed part of the EU label for
RUCONEST®. The CHMP also noted that the importance of
favorable effects of RUCONEST® is further supported by the
continued availability of supply of RUCONEST® (produced by
recombinant technology) in comparison to supply from blood donor
plasma that may vary, and that as it is not a blood derived product
RUCONEST® carries no potential risk of exposure to blood-borne
pathogens.
We continue to make good progress in developing our pipeline to
produce the next generation of therapies from our platform.
Our first program lead for Pompe disease is now entering its
next stage of pre-clinical testing and process development with the
second program for Fabry Disease following by approximately six
months. We will be announcing details of these programs and
the timetable of their clinical development later this year.
After the end of the period we updated our distribution
agreement with SOBI. As of 1 October this year, Pharming will
commercialize RUCONEST® directly in a further 21 countries.
SOBI had not yet begun significant sales efforts in most of
these countries. The countries include the major EU markets
of the UK, France and Spain, and a number of countries across
Europe and the Middle East which do not yet have optimal
access to therapies for HAE. In some of these countries we
will continue to act in partnership with the HAEi Global Access
Program.
Earlier this month we also announced positive results from a
Phase 2 clinical study of RUCONEST® for prophylaxis in
patients with HAE. In the study, RUCONEST® showed a
clinically relevant and statistically significant reduction in
attack frequency for both the twice-weekly (p-value <0.0001) and
once-weekly (p-value = 0.0004) treatment regimens as compared with
placebo. The secondary endpoint showed a response rate of up
to 96% in the twice weekly treated per protocol group of patients,
corroborating reports from day-to-day use of RUCONEST. At present,
there is only one product formally approved for treatment of
prophylaxis of HAE in the USA, and
the market is expected to be around $800
million in 2017. This represents a huge potential
market for RUCONEST®, which if approved would be the only product
approved for both acute attacks and prophylactic therapy. More
detail is given below.
Based on our financial results for the first half of 2016, we
expect that both sales and gross profits will continue to improve
during the remainder of the year and that investments in R&D
will continue to increase gradually, following the sales trends. No
further financial guidance is provided
Sijmen de Vries
Chief Executive Officer
Operational Review
- Pharming announced positive results from a Phase 2 clinical
study of RUCONEST® (recombinant C1 esterase inhibitor, 50 IU/kg)
for prophylaxis in patients with hereditary angioedema (HAE). In
the study, RUCONEST® showed a clinically relevant and statistically
significant reduction in attack frequency for both the twice-weekly
and once-weekly treatment regimens as compared with placebo.
Placebo RUCONEST(R) RUCONEST(R)
Intent-to-Treat Analysis Once/week Twice/week
(n=32) Primary: Mean number of attacks 7.2 4.4 2.7
Confidence Interval (95%) 5.8-8.6 3.1-5.6 1.8-3.7
p-value 0.0004 p<0.0001
(n=31) Secondary: % Patients with more
than 50% reduction in attack frequency 42% 74%
Confidence Interval (95%) 26-59 57-86
Per Protocol Analysis
(n=23) Mean number of attacks 7.5 3.8 2
Confidence Interval (95%) 6.0-9.0 2.5-5.1 1.3-2.7
p-value p<0.0001 p<0.0001
(n=23) % Patients with more than 50%
reduction in attack frequency 57% 96%
Confidence Interval (95%) 37-74 79-99
- Pharming and SOBI agreed an amendment to their distribution
agreement which resulted in Pharming taking over responsibility for
marketing RUCONEST® in Algeria,
Andorra, Bahrain, Belgium, France, Ireland, Jordan, Kuwait, Lebanon, Luxembourg, Morocco, Oman, Portugal, Qatar, Syria,
Spain, Switzerland, Tunisia, United Arab
Emirates, United Kingdom
and Yemen, effective October 1st, 2016.
- In March 2016, the European
Commission adopted the CHMP recommendation to include the treatment
of HAE attacks in adolescents with HAE and to remove the
requirements for rabbit IgE testing that formed part of the EU
label for RUCONEST®.
- In February, Pharming and Cytobioteck announced an extension of
their distribution agreement for RUCONEST® to cover additional
Central and Latin American countries.
Financial Review
Amounts in EURm, except per share
data HY 2016 HY 2015 %Change
Income Statement
Product sales 4.2 4.1 2%
License fees 1.1 1.1 -
Revenue 5.3 5.2 2%
Gross Profit 3.3 2.9 14%
Costs 9.7 9.0 8%
Operating Result (6.2) (6.1) 2%
Balance Sheet
Cash & marketable securities 21.7 25.0 -13%
Share Information
Earnings per share (0.016) (0.009)
Financial Highlights
Revenues
Revenues from product sales slightly increased in the first half
year of 2016 to €4.2 million from €4.1 million in 2015, as a result
of increased US product sales. RUCONEST® sales in the US amounted
to €3.5 million compared to €3.0 million in 2015, sales in the EU
and ROW amounted to €0.7 million compared to €1.1 million in 2015,
as a result of SOBI adjusting inventory levels in Q1. Compared with
the first quarter of 2016, the second quarter was up approximately
33% in the USA, with sales of
approximately €2.0 million compared to €1.5 million in the first
quarter, and 63% overall, to €2.6 million from €1.6 million in the
first quarter.
Other license fee income amounted to €1.1 million, which was in
line with 2015. 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.
Gross Profit
Gross profit increased by €0.4 million to €3.3 million in the
first half year of 2016, mainly as a result of an improving mix
between US product sales, direct sales and sales by EU partner
SOBI. Compared with the first quarter of 2016, gross profit was up
from €1.6m to €1.7m in the second quarter.
Operating Costs
Operating costs increased to €9.7 million in the first half year
of 2016 from €9.0 million in 2015. Research and development
(R&D) costs increased by €0.5 million to €7.0 million in the
first half year of 2016, mainly due to costs for the expansion of
our R&D site in France and
increased R&D activities in the
Netherlands.
General and administrative costs increased by €0.2 million to
€2.0 million in the first half year of 2016 as a result of new
hires and increased consultancy costs.
Marketing and sales costs remained the same in 2016 at €0.6
million. These costs are for direct commercialization activities by
Pharming in Germany, Austria, the
Netherlands and support to other countries (outside US and
EU).
Operating Result
As a result of the combination of the increase in gross profit
and the increase of operating costs due to increased investment in
new programs, the operating loss of €6.2 million in the first six
months of 2016 was only slightly increased relative to last year's
loss for the first half year (€6.1 million), despite the
significant increase in R&D activity since then.
Financial Income and Expenses
The 2016 (mainly non-cash) net loss on financial income and
expenses was €0.5 million, compared with a net gain of €2.6 million
in 2015. This is mainly due to the gain on revaluation of warrants
of €0.5 million, the interest expense of the loans of €0.9 million
and the interest expense on finance lease liabilities of €0.1
million. The gains or losses on revaluation of warrants which
represented the bulk of last year's gain and part of this year's
loss are non-cash gains accounted for in accordance with IFRS which
cannot actually be realized.
Net Result
As a result of the above items, the (mainly non-cash) accounting
net loss increased from €3.5 million in the first half of 2015 to
€6.7 million in the first half of 2016. The increase of the net
loss was mainly related to the decrease in financial income and
expenses as a result of expenses from interest on the loans, and
reduced non-cash income from revaluation of derivatives.
Cash and Cash Equivalents
The total cash and cash equivalent position (including
restricted cash) decreased by €10.1 million from €31.8 million at
year-end 2015 to €21.7 million at the end of June 2016. The decrease in cash is equal to
change during the first half of 2015 and mainly relates to
increased R&D spend offset by an increase in trade and current
liabilities. In 2015, the decrease of cash was mainly related to
the build up of inventories. Cash at the end of Q1 2016 was
€27.7 million, and the decrease since then is mainly attributable
to inventory costs for the most recent batches of RUCONEST®.
Equity
The Company's equity position amounted to €18.2 million at the
end of June 2016 (31 December 2015: €23.8 million), mainly due to
the net loss and the share-based compensation. In addition, it
should be noted that the Company has a significant amount of
deferred license fee income (June
2016: €8.9 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 at 30
June 2016 and at July 28, 2016
was 412,555,374.
Performance of Pharming Shares
During the first half year, the Pharming stock price fluctuated
around an average price of €0.21 per share. The half year-end price
was €0.19 (30JUN2015: €0.30), with a high of €0.24 in April and a
low of €0.17 occurring in June.
Outlook
For the remainder of 2016, the Company expects:
- Investment in the production of RUCONEST® in order to ensure
continuity of supply to the growing markets in the USA, Europe
and the rest of the world.
- Assessment of the clinical trial results for RUCONEST® in
prophylaxis of HAE with the US FDA and EMA and the development of
this product and other versions of RUCONEST®.
- We will also continue to invest carefully in the new pipeline
programs in Pompe Disease and Fabry Disease, and other new
development opportunities and assets as these occur.
- Increasing marketing activity where this can be profitable for
Pharming, in addition to our current territories of Austria, Germany and the
Netherlands. From October, we will begin operations in
the UK, France and Spain as well as other countries which have
been obtained from SOBI under the agreement amendment.
- We will continue to support all our marketing partners
everywhere in order to enable the maximization of the sales and
distribution potential of RUCONEST® for patients in all
territories, as we continue to believe that RUCONEST® represents a
fast acting, effective, reliable and safe therapy option available
to HAE patients.
No further financial guidance for 2016 is provided.
The Board of Management
Sijmen de Vries, CEO
Bruno Giannetti, COO
Robin Wright, CFO
About Pharming Group N.V.
Pharming is a specialty pharmaceutical company developing
innovative products for the safe, effective treatment of rare
diseases and unmet medical needs. Pharming's lead product,
RUCONEST® (conestat alfa) is a recombinant human C1 esterase
inhibitor approved for the treatment of acute Hereditary Angioedema
("HAE") attacks in patients in Europe, the US and rest of the world. The
product is available on a named-patient basis in other territories
where it has not yet obtained marketing authorization.
RUCONEST® is commercialized by Pharming in Austria, Germany and The
Netherlands. From October 1,
2016, Pharming will also commercialize the product in
Algeria, Andorra, Bahrain, Belgium, France, Ireland, Jordan, Kuwait, Lebanon, Luxembourg, Morocco, Oman, Portugal, Qatar, Syria,
Spain, Switzerland, Tunisia, United Arab
Emirates, United Kingdom
and Yemen.
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 distributed in the United
States by Valeant Pharmaceuticals International, Inc. (NYSE:
VRX/TSX: VRX), following Valeant's acquisition of Salix
Pharmaceuticals, Ltd.
RUCONEST® is distributed in Argentina, Colombia, Costa
Rica, the Dominican
Republic, Panama and
Venezuela by Cytobioteck, in
South Korea by HyupJin Corporation
and in Israel by Megapharm.
RUCONEST® is also being investigated in a Phase II clinical
trial for the treatment of HAE in young children (2-13 years of
age) and evaluated for various additional follow-on
indications.
Pharming's technology platform includes a unique, GMP-compliant,
validated process for the production of pure recombinant human
proteins that has proven capable of producing industrial quantities
of high quality recombinant human proteins in a more economical and
less immunogenetic way compared with current cell-line based
methods. Leads for enzyme replacement therapy ("ERT") for Pompe and
Fabry's diseases are being optimized at present, with additional
programs not involving ERT also being explored at an early stage at
present.
Pharming has a long term partnership with the Shanghai Institute
of Pharmaceutical Industry ("SIPI"), a Sinopharm company, for joint
global development of new products, starting with recombinant human
Factor VIII for the treatment of Haemophilia A. Pre-clinical
development and manufacturing will take place to global standards
at SIPI and are funded by SIPI. Clinical development will be shared
between the partners with each partner taking the costs for their
territories under the partnership.
Pharming has declared that the
Netherlands is its "Home Member State" pursuant to the
amended article 5:25a paragraph 2 of the Dutch Financial
Supervision Act.
Additional information is available on the Pharming website:
http://www.pharming.com
Forward-looking Statements
Contact
Sijmen de Vries, CEO: T: +31 71 524 7400
Robin Wright, CFO : T: +31 71 524
7432
FTI Consulting
Julia Phillips/ Victoria Foster Mitchell, T: +44 203 727
1136
Conference call information
Today, Chief Executive Officer Sijmen de Vries and Chief
Financial Officer Robin Wright will
discuss the half year 2016 financial results in a conference call
at 10:00am (CET). To participate,
please call one of the following numbers 10 minutes prior to the
call:
From the Netherlands:
+31(0)20 703 8261
From the UK: +44 (0)20 3043 2025
From Belgium: +32 (0)2
400 6926
From France: +33 (0)1 76
77 22 57
From Germany: +49 (0)69
2222 25568
From Switzerland: +41
(0)22 567 5750
Conference ID: 7933174
Pharming Group N.V.
Consolidated Interim Financial Statements (Unaudited)
For the first six months ended 30 June
2016
Consolidated statement of income
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the consolidated interim financial statements
Consolidated Statement of Income
For the first six months ended 30 June
Amounts in EUR'000, except per share data Notes HY 2016 HY 2015
Product sales 4,170 4,131
Release of deferred license fee income 1,104 1,104
Revenues 6 5,274 5,235
Costs of product sales (1,795) (2,551)
Inventory impairments (209) 200
Costs of sales 7 (2,004) (2,351)
Gross profit 3,270 2,884
Other income 195 34
Research and development (7,029) (6,565)
General and administrative (2,049) (1,794)
Marketing and sales (598) (621)
Costs 7 (9,676) (8,980)
Operating result (6,211) (6,062)
Fair value gain/(loss) on revaluation
derivatives 455 2,302
Other financial income and expenses (978) 273
Financial income and expenses (523) 2,575
Result before income tax (6,734) (3,487)
Income tax expense - -
Net result for the period (6,734) (3,487)
Attributable to:
Owners of the parent (6,734) (3,487)
Total net result (6,734) (3,487)
Basic earnings per share (EUR) (0.016) (0.009)
Consolidated Statement of Comprehensive Income
For the first six months ended 30 June
Amounts in EUR'000 HY 2016 HY 2015
Net result for the period (6,734) (3,487)
Currency translation differences (1) 3
Items that may be subsequently reclassified to
profit or loss (1) 3
Other comprehensive income, net of tax (1) 3
Total comprehensive income for the period (6,735) (3,484)
Attributable to:
Owners of the parent (6,735) (3,484)
Consolidated Balance Sheet
As at date shown
Amounts in EUR'000 Notes 30 June 31 December
2016 2015
Intangible assets 698 724
Property, plant and equipment 5,875 5,661
Restricted cash 270 200
Long term prepayment 500 -
Non-current assets 7,343 6,585
Inventories 8 19,361 16,229
Trade and other receivables 5,550 3,220
Cash and cash equivalents 21,414 31,643
Current assets 46,325 51,092
Total assets 53,668 57,677
Share capital 4,126 4,120
Share premium 283,528 283,396
Legal reserves 66 66
Accumulated deficit (269,563) (263,743)
Shareholders' equity 9 18,157 23,839
Loans and borrowings (more than one
year) 10 9,631 11,757
Deferred license fees income 6,704 7,808
Finance lease liabilities 712 798
Non-current liabilities 17,048 20,363
Loans and borrowings (less than one
hyear) 10 5,281 3,047
Deferred license fees income 2,207 2,207
Derivative financial liabilities 11 493 953
Trade and other payables 10,195 7,005
Finance lease liabilities 288 263
Current liabilities 18,463 13,475
Total equity and liabilities 53,668 57,677
Consolidated Statement of Cash Flows
For the first six months ended 30 June
Amounts in EUR'000 HY 2016 HY 2015
Operating result (6,211) (6,062)
Non-cash adjustments:
Depreciation, amortization 316 257
Accrued employee benefits 914 1,361
Deferred license fees (1,104) (1,104)
Operating cash flows before changes in working
capital (6,084) (5,548)
Changes in working capital:
Inventories (3,132) (1,153)
Trade and other receivables (2,330) (2,702)
Payables and other current liabilities 3,214 (117)
Total changes in working capital
(2,247) (3,972)
Changes in non-current assets, liabilities and
equity (258) 199
Net cash flows used in operating activities (8,590) (9,321)
Capital expenditure for property, plant and
equipment (752) (408)
Divestments of assets - 2
Net cash flows used in investing activities (752) (406)
Payments of finance lease liabilities - (9)
Repayments of loans (536) -
Net cash flows from financing activities (536) (9)
Increase (decrease) of cash (9,878) (9,736)
Exchange rate effects (293) 328
Cash and cash equivalents at 1 January 31,843 34,385
Total cash at 30 June 21,672 24,977
Of which restricted cash 270 200
Cash and cash equivalents at 30 June 21,402 24,777
Consolidated Statement of Changes in Equity
For the first six months ended 30 June
Attributable to owners of the parent
Number of Share Share
Amounts in EUR'000 Notes shares capital Premium
Balance at 1 January 2015 407,686,599 4,077 282,260
Result for the period - -
Other comprehensive income - -
Total comprehensive income - -
Share-based compensation - - -
Bonuses settled in shares 523,813 5 168
Shares issued for cash - -
Warrants exercised/ issued - -
Options exercised - -
Total transactions with owners
recognized directly in equity 523,813 5 168
Balance at 30 June 2015 408,210,412 4,082 282,428
Balance at 1 January 2016 411,971,790 4,120 283,396
Result for the period - -
Other comprehensive income - -
Total comprehensive income - -
Share-based compensation - - -
Bonuses settled in shares 9 533,584 5 121
Shares issued for cash - - -
Warrants exercised/ issued 50,000 1 11
Options exercised - - -
Total transactions with owners,
recognized directly in equity 583,584 6 132
Balance at 30 June 2016 412,555,374 4,126 283,528
Attributable to owners of the parent
Legal Accumulated
Amounts in EUR'000 Notes reserves Deficit Total Equity
Balance at 1 January 2015 36 (256,530) 29,843
Result for the period - (3,487) (3,487)
Other comprehensive income 3 - 3
Total comprehensive income 3 (3,487) (3,484)
Share-based compensation - 1,361 1,361
Bonuses settled in shares - - 173
Shares issued for cash - - -
Warrants exercised/ issued - - -
Options exercised - - -
Total transactions with
owners,
recognized directly in equity - 1,361 1,534
Balance at 30 June 2015 39 (258,656) 27,893
Balance at 1 January 2016 66 (263,743) 23,839
Result for the period - (6,734) (6,734)
Other comprehensive income - - -
Total comprehensive income - (6,734) (6,734)
Share-based compensation - 914 914
Bonuses settled in shares 9 - - 126
Shares issued for cash - - -
Warrants exercised/ issued - - 12
Options exercised - - -
Total transactions with
owners,
recognized directly in equity - 914 1,052
Balance at 30 June 2016 66 (269,563) 18,157
Notes to the Consolidated Interim Financial
Statements
For the first six months ended 30 June
1. Company information
Pharming Group N.V. is a limited liability public company which
is listed on Euronext Amsterdam (PHARM), with its headquarters and
registered office located at:
Darwinweg 24
2333 CR Leiden
The Netherlands
2. Basis of preparation
These consolidated interim financial statements for the six
month ended 30 June 2016 have been
prepared in accordance with IAS 34, 'Interim financial
reporting'.The condensed interim financial statements should be
read in conjunction with the annual financial statements for the
year ended 31 December 2015, which
have been prepared in accordance with with International Financial
Reporting Standards (IFRS) and IFRS Interpretations Committtee
(IFRS IC) interpretations applicable to companies reporting under
IFRS as adopted by the European Union and valid as of the balance
sheet date.
3. Accounting policies
The accounting policies adopted are consistent with those of the
financial statements for the year ended 31
December 2015.
4. Estimates and judgements
The preparation of interim financial statements in conformity
with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in
the process of applying the Company's accounting policies. In
preparing these condensed interim financial statements, the
significant judgements made by management in applying the Company's
accounting policies were the same as those apllied to the
consolidated financial statements for the ended 31 December 2015.
5. Seasonality of operations
Seasonality has no material impact on Company's interim
financial statements.
6. Segment information
The Board of Management is the chief operating decision-maker.
The Board of Management considers the business from both a
geographic and product perspective. From a product perspective, the
Company's business is almost exclusively related to the recombinant
human C1 esterase inhibitor business. From a geographic
perspective, the Company is operating in three main segments: the
US, Europe and Rest of the world
(RoW). The Board of Management primarily measures revenues to
assess the performance of the operating segments. Costs and assets
are not allocated to the geographic segments.
Total revenues per geographic segment for the first half
year:
-
Amounts in EUR '000 HY 2016 HY 2015
US 4,072 3,570
Europe and RoW 1,202 1,665
Total revenues 5,274 5,235
7. Expenses by nature
Cost of product sales in the first half year of 2016 amounted to
€1.8 million (HY 2015: €2.6 million). Inventory impairments
amounted to an addition of €0.2 million in the first half of 2016
(2015: reversal of €0.2 million). The impairment stems from the
valuation of the inventories against lower net realisable value,
related to reallocation of inventories to the different markets
with different prices, based on sales forecasts by management and
commercial partners, and clinical programmes. Actual sales can
differ from these forecasts.
Operating costs increased to €9.7 million from €9.0 million in
the first half year of 2015. The increase is a result of the
increased costs for the new R&D site in France and increased R&D activities in
the Netherlands.
Research and Development costs increased by €0.5 million
compared to HY 2015 and amounted to €7.0 million in the first half
year of 2016, General and Administrative costs increased to €2.0
million from €1.8 million in 2015 and Marketing and Sales costs
remained the same and amounted to €0.6 million.
Employee benefits
Employee benefits are charged to Research and development costs
or General and administrative costs or Marketing and Sales costs
based on the nature of the services provided.
Depreciation and amortisation charges
Amounts in EUR '000 HY 2016 HY 2015
Property, plant and equipment (290) (231)
Intangible assets (26) (26)
Total (316) (257)
The increase of depreciation charges of property, plant and
equipment in the first half year of 2016 as compared to 2015 stems
from investments.
Amortisation charges of intangible assets have been fully
allocated to research and development costs in the statement of
income; for property, plant and equipment, in the first half year
of 2016 an amount of €230k was charged to research and development
costs (HY 2015: €179k) and €60k to general and administrative
expenses (HY 2015: €52k).
8. Inventories
Inventories include batches RUCONEST® and skimmed milk available
for production of RUCONEST®.
30 June 31 December
Amounts in EUR'000 2016 2015
Finished goods 10,939 11,397
Work in progress 6,445 3,232
Raw materials 1,977 1,600
Balance at end of period 19,361 16,229
The inventory valuation at 30 June
2016 is stated net of a provision of €0.5 million
(2015: €0.5 million) to write inventories down to their net
realisable value.
Changes in the adjustment to net realisable value:
30 June 31 December
Amounts in EUR '000 2016 2015
Balance at 1 January (462) (1,691)
Reversal of (addition to) impairment for the year (230) 247
Related to costs of product sales 145 548
Related to operating costs 5 434
Balance at end of period (542) (462)
In 2016, the addition of €0.2 million was based on adjusted
sales forecasts. The impaired amount related to operating costs was
used for investigational medicinal product drugs in clinical
studies.
Cost of inventories included in the cost of product sales in the
first half year 2016 amounted €1.8 million (2015:
€2.6 million). The main portion of inventories at 30 June 2016 has expiration dates starting beyond
2018 and is expected to be sold or used before expiration.
9. Equity
The Company transferred an aggregate number of 533,584 shares to
members of the Board of Management and employees in lieu of bonus
rights for the year 2015.
10. Loans and borrowings
On 20 July 2015, the Company
entered into a straight debt financing with Oxford Finance LLC and
Silicon Valley Bank (the Lenders).
Under the terms and conditions of the agreement, the Lenders
provide USD17 million (net €15.5
million) secured senior debt funding against 48 months' promissory
notes with a 7.02% fixed interest per annum. The initial 12 months
of the notes are interest payments only, followed by monthly
re-payment of the notes in a 36 months' straight amortization
scheme. In 2016 the total amount of interest was €0.9
million.
As further consideration for the facility, the Lenders have
received 2,315,517 warrants (amounting to a 3.95% warrant coverage)
with a strike price of €0.29, representing the average closing
price of Pharming shares over the last ten days prior to the date
of the loan, and a final payment on maturity (1 July 2019) of 9% of the principal sum. Other
facility fees of €0.6 million have been deferred from the original
loans.
The Company and its subsidiaries have pledged all of its
receivables, tangible assets and intellectual property rights as
collateral security to the Lenders.
After initial recognition at fair value, the carrying amount of
the loan is restated at each reporting date.
In case of a change in the underlying cash flows, the carrying
amount of the loan is restated to the net present value of the
underlying cash flows discounted at the effective interest rates of
12.2% and 13.1%.
The Loans can be summarised as follows:
30 June 31 December
Amounts in EUR '000 2016 2015
Loans from banks 14,912 14,804
Current portion of the long-term loans due within one
year (5,281) (3,047)
Portion of long-term loans due after one year 9,631 11,757
The remaining lifetimes of the loans are less than 5 years.
11. Derivative financial liabilities
Derivative financial liabilities relate to financial instruments
and include warrants issued in relation to the issue of equity.
Derivative financial liabilities include the initial fair value of
the 4,253,125 warrants issued in connection with the private
placements in October 2013 and the
Loan and Security Agreement with Oxford Finance LLC and Silicon
Valley Bank, as well as changes in the fair value of the warrants
resulting from adjustments of their exercise prices. All
outstanding warrants were revalued for accounting purposes at
30 June 2016.
Movement of derivative financial liabilities can be summarised
as follows:
Year to
Period to 30 31 December
Amounts in EUR '000 June 2016 2015
Balance at 1 January 953 4,266
Initial recognition upon issue - 590
Fair value losses (gains) derivatives (455) (3,380)
Exercise of warrants (5) (523)
Balance at end of period 493 953
Fair value gains and losses on derivatives have been presented
within financial income and expenses.
12. Commitments and contingencies
In the first half year of 2016, the Company entered into a
Manufacture and Service Agreement with BioConnection for the fill
& finish of RUCONEST® (Drug Product), placebo and other
products.
There were no other material changes to the commitments and
contingent liabilities from those disclosed in Note 28 of the 2015
Annual Report.
13. Fully-diluted shares
The total number of outstanding shares at 30 June 2016 and at 28
July 2016 is 412,555,374.
The composition of the number of shares and share rights
outstanding as well as authorised share capital as per the date of
these financial statements is provided in the following tables.
28 July 2016
Shares 412,555,374
Warrants 4,253,125
Options 43,300,672
LTIP 5,092,396
Issued 465,201,567
Available for issue 184,798,433
Authorised share capital 650,000,000
14. Events since the end of the reporting
period
On 14 July 2016, Pharming Group NV
and Swedish Orphan Biovitrum AB announced an amendment of the
RUCONEST® distribution agreement signed in 2009 with Swedish Orphan
Biovitrum AB.
In addition to Austria,
Germany and Netherlands, Pharming will market RUCONEST®
directly into an additional 21 countries, effective 1 October 2016. These countries include
Algeria, Andorra, Bahrain, Belgium, France, Ireland, Jordan, Kuwait, Lebanon, Luxembourg, Morocco, Oman, Portugal, Qatar, Syria,
Spain, Switzerland, Tunisia, United Arab
Emirates, United Kingdom
and Yemen.
On 18 July 2016, Pharming Group
N.V. announced positive results from a Phase 2 clinical study of
RUCONEST® (recombinant C1 esterase inhibitor, 50 IU/kg) for
prophylaxis in patients with hereditary angioedema (HAE). In the
study, RUCONEST® showed a clinically relevant and statistically
significant reduction in attack frequency for both the twice-weekly
and once-weekly treatment regimens as compared with
placebo.
PRN NLD