Main results compared to Q1 2018•19.5% increase in revenues
•49% increase in operating profit
•23% increase in net profit


Leiden, the Netherlands – 16 May 2019

Pharming Group N.V. (“Pharming” or “the Company”) (Euronext Amsterdam: PHARM) presents its (unaudited) interim financial report for the first quarter ended 31 March 2019.

Financial highlights
•Revenues increased approximately 19.5% to €35.2 million, compared with €29.5 million during the same period last year.
•US net product sales increased to €33.7 million (Q1 2018: €27.9 million), an increase of 21% compared to the same period last year, and were similar to the last quarter of 2018, reflecting the customary effect of calendar year patient insurance renewals in the USA, consistent with prior years. In Europe and the rest of the world, product sales for the first three months of 2019 remained at €1.3 million (Q1 2018: €1.3 million), mainly due to lower ordering by SOBI for certain Eastern European markets balanced by growth for Pharming direct markets.
•Operating profits rose by 49% to €12.2 million, compared to €8.2 million in the same period last year, reflecting an improvement in gross margin and better cost controls as well as .
•Net profit increased by 23% to €6.7 million, compared to €5.5 million for Q1 2018 after upward restatement of Q1 2018 by €2.2 million, despite a much higher tax charge for this quarter of €3.0 million (2018: €0.8 million). This tax charge is covered by the tax losses capitalized in the deferred tax asset taken at the end of 2018, and will not result in a cash payment. The restatement of Q1 2018 arose from changes to the accounting in that quarter for redemption of the last of the Ordinary Bonds and the effective interest on the Orbimed loan, in order to reflect the fees due on the quarterly repayments of this loan under financial income and expenses, as described more fully previously in the Annual Report 2018, and does not change the published 2018 accounts.
•Positive cashflows during the quarter were driven by strong revenue despite intensified competition, generating almost €10 million cash above the cash required for operating costs. This was then reduced by the quarterly instalment of €7.7 million of the principal amount of the Company’s outstanding loan including associated fees and the US$20 million (€17.5 million) sales performance milestone paid to Bausch Health Companies Inc. (formerly Valeant Pharmaceuticals International, Inc.). This resulted in a decrease in the cash position to €66.5 million from €81.5 million at 31 December 2018 (€59.8 million at 31 March 2018).
•The equity position improved from €61.8 million at the end of December 2018 to €69.1 million at the end of the first quarter of 2019 (Q1 2018: €31.6 million), reflecting the net result for the quarter.
•Property plant and equipment in the non-current assets section of the balance sheet, and Finance lease liabilities under non-current liabilities, show the effects of new disclosures of items acquired under leases under the new financial standard IFRS 16. These changes have had no material net effect on operating results during the quarter.
•Other financial liabilities, which refers to the contingent consideration for the milestones, reflects the payment of the first successful sales performance milestone in March 2019 and the revised probability and timing for paying the last milestone. The milestone payment of $20 million (€17.5 million) does not appear in the income statement itself because the cost of the milestone is balanced by the release of the contingent consideration liability (also €17.5 million) shown in current liabilities at the year end, after allowing for exchange rate differences.
•Inventories changed from €17.3 million at the end of December 2018 to €13.6 million at the end of the first quarter of 2019, mainly due to sales in the USA slightly exceeding commercial production in the first quarter and as some production was diverted to provide clinical trial material for the pre-eclampsia study and other studies.
•Since the last reporting date of 28 March 2019, the Company has issued a total of 2,097,420 shares in connection with a number of exercises of options under the current schemes. The number of issued shares as at 15 May 2019 is 624,331,765. The fully diluted number of shares as at 15 May 2019 is 663,653,916.

Operational highlights since the reporting date
•In April, following a preliminary announcement on 29 March 2019, Pharming completed its investment of €1.6 million in cash and conversion of €2.5 million of prepayments into new equity in its Fill & Finish partner BioConnection BV, which manufactures the sterile sealed vials of Pharming’s product RUCONEST® from the purified drug substance. Together with additional shares acquired from existing shareholders, this gives Pharming a significant minority stake in BioConnection. Other current shareholders of BioConnection also supported the company with additional investments. This investment was made to support BioConnection to make capacity expansion investments which will benefit Pharming. No further details were disclosed.

Sijmen de Vries, Chief Executive Officer, commented:


“We are pleased to report strong results today in a period of intense competition. Pharming’s revenue and profit performance confirm the success of our in-market strategy for RUCONEST® as we see continued growth in underlying demand for the product.

Looking forward to the remainder of 2019, we therefore expect continued sales growth, driven by increasing patient numbers and despite competitive pressure.

In addition, we continue to make good progress in our pipeline. Following ongoing interaction with ethics committees in the Netherlands and Australia, we anticipate receiving approval shortly to begin our clinical study in pre-eclampsia. We also expect to initiate a clinical trial with RUCONEST® in the second half of the year to treat acute kidney injury in patients undergoing percutaneous coronary interventions accompanied by contrast-enhanced examinations."

Financial summary

3 months to 31 March


Amounts in €m, except per share data
20191st Quarter 2018 1st Quarter % Change
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Outlook

For the remainder of 2019, the Company expects:
•Continued growth in revenues from sales of RUCONEST®, mainly driven by the USA and European operations.
•Maintenance of positive quarterly net earnings during the year.
•Continued investment in the expansion of production of RUCONEST® in order to ensure continuity of supply to the growing markets in the US, Europe, China and the Rest of the World.
•Investment in clinical trials for pre-eclampsia and acute kidney injury, and support for investigators wishing to explore additional indications for RUCONEST®
•Investment in further clinical trial programs for RUCONEST® in acute treatment and prophylaxis of HAE, the development of a small intravenous liquid version and new intramuscular, subcutaneous and intradermal versions of RUCONEST® as well as research into other routes of administration.
•Investment in development of the new pipeline programs in Pompe disease and Fabry’s disease, and other new development opportunities and assets as these occur.
•Increasing marketing activity where this can be profit-enhancing for Pharming.
•Supporting all our teams and marketing partners in order to enable the maximisation of the sales and distribution potential of RUCONEST® for patients in all territories.

About Pharming Group N.V.
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