Leiden, The Netherlands, July 21, 2010. 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, 2010 ("HY1"). The Company reports improved operating results and a significantly increased cash position. At the same time, Pharming reports a substantial net loss as a result of securities issued to public and private bondholders.

Key financial items first half year 2010
Net cash position increased from €2.3 million at year-end 2009 to €9.8 million at the end of the first half of 2010. This results from the January convertible debt financing of €7.5 million, the equity financing of 100 million shares with gross proceeds of €12 million and a €3.0 million upfront payment received from Swedish Orphan Biovitrum International (SOBI) in the second quarter of 2010;
Operational costs decreased from €14.6 million in the first half of 2009 to €12.1 million in the same period of 2010 as a result of capitalization of Ruconest(TM)/Rhucin® development costs in 2010 (€0.3 million) and the higher development costs incurred in (the first half of) 2009;
Of the €7.5 million convertible debt financing in early January, €6.4 million converted into shares in the second quarter of 2010 (€1.1 million remaining at June 30, 2010);
Financial and other income and expenses resulted in a €0.8 million loss in the first six months of 2009 and €16.3 million in the same period ended June 30, 2010. The first half 2009 income and expenses were highly effected by one-time profits of €3.1 million on bond conversions and fair value appreciation of marketable securities. In 2010, former bondholders, bought off in the fourth quarter of 2009, were eligible for shares valued at €2.6 million and a net expense of €9.0 million results from several adjustments in conversion and warrant rights granted to private bondholders engaged in 2010;
Number of outstanding shares increased at year end 2009 and end of first quarter 2010 from 154,501,037 to 304,953,323 at June 30, 2010 as a result of the equity financing of 100 million shares, bond conversions (38,444,574 shares), the exercise of warrants (11,600,237 shares) and the payment of interest (407,475 shares).

"We are very pleased with the more rapid than anticipated progress we have been making on the Ruconest EMA filing and with the reduction of operating costs compared to the same period last year", said Sijmen de Vries, Chief Executive Officer. "For the second half of 2010, our main focus will be on working with our European partner Swedish Orphan Biovitrum International to prepare for the upcoming market launches of Ruconest, whilst at the same time we continue to work on the conclusion of additional licensing deals and on furthering progress of the FDA filing process in the USA. Although we have already improved our cash position substantially, we may however need some additional funding to be able to at the end of October clear the remaining €10.9 million convertible debt and continue operations. Besides the expected milestone payment from SOBI upon the issuing of the marketing authorization for Ruconest by the European Commission, the first sales from Ruconest and milestones from potential other partners, we are also assessing various financing options, including capital market transactions and use of the SEDA facility with Yorkville, under which we can still raise over €23 million. Despite the continuing challenging market conditions, we are confident that we will succeed in achieving our targets and thus creating a financially stable Pharming."
Key financial data (in €million, except per share data) (unaudited)

HY1 endedJune 30, 2010 Year endedDecember 31, 2009 HY1 ended June 30, 2009

Statement of financial position:
Non-current assets (excluding restricted cash) 27.0 27.1 30.1
Cash and marketable securities, net of bank overdrafts 9.8 2.3 10.7
Inventories and other current assets 12.4 12.6 14.2
Convertible bonds (including derivative financial liability) 16.5 9.5 26.7
Other liabilities (excluding bank overdrafts) 21.3 19.2 20.3
Total equity 11.4 13.3 8.0


Statement of income:

Grants and other income 0.4 1.1 0.3
Operational costs (12.1) (29.0) (14.6)
Financial and other income and expenses (16.3) (4.2) (0.8)
Net loss (28.0) (32.1) (15.1)

Statement of cash flows:
Net cash used in operating activities (10.0) (24.3) (13.4)
Net cash from/(used in) investment activities - 4.2 (0.3)
Net cash from financing activities 18.3 2.5 0.2

Share data:
Outstanding shares at the end of the period 304,953,323 154,501,037 112,362,987

Weighted average shares outstanding in the period 177,091,915 116,177,686 100,138,967
Basic and diluted net loss per share (€) (0.24) (0.28) (0.15)

The Company significantly increased its net cash position from €2.3 million at year end 2009 to €9.8 million at the end of the first half 2010 by raising a net amount of €18.7 million from several key equity and debt transactions, including the partial conversion of debts into shares, while equity slightly decreased from €13.3 million to €11.4 million.

The Company reports improving operating results: decreasing losses from operating activities of €11.7 million compared to €14.3 million in the first half of 2009 and decreasing operating cash outflows from €13.4 million to €10.0 million as a result of a combination of a €3 million upfront payment received from SOBI, reduced operating costs and timing of various payments.

Net losses increased significantly for the first half of 2010 to €28.0 million compared to €15.1 million in the same period of 2009, which first and foremost stems from the effect of securities issued to public and private bondholders. These effects are expected to be substantially non-recurring.

Inventories at June 30, 2010 amounted to €11.2 million of Ruconest/Rhucin. The majority of these inventories are immediately available for future Ruconest sales in the European territory through commercial partnerships. Other inventories are dedicated to carry out other (pre)clinical studies for indications in the field of transplantation. On July 6, 2010, Pharming announced the signing of a toll manufacturing agreement with Sanofi Chimie in order to increase the production capacity of Ruconest/Rhucin, including up-scaling of the production process and further decrease the cost of goods.

On 19 July, 2010, the Company announced the completion of the DNage B.V ("DNage") spin-off. As part of the spin-off, an agreement was reached with the former shareholders of DNage under which certain earn-out obligations will be settled through payment of 5 million Pharming shares and providing the former DNage shareholders with a 49% stake in DNage. The initial share of the Company in DNage will be 51% but is expected to further decrease if and when DNage attracts new investors. Pharming will provide an undisclosed but limited bridge funding to DNage and will discontinue this after a certain period has expired.

Financial position

Early 2010, the Company entered into a 9% convertible debt financing of €7.5 million and issued 15,000,000 warrants with an exercise price of €0.50 and an expiration date of December 31, 2012. At the end of the first quarter 2010, as a result of meeting certain conditions in the investment agreement, the bondholders received an additional number of 3,750,000 warrants, bringing the total number of warrants under the agreement to 18,750,000, while at the same time the exercise price was lowered from €0.50 to €0.40. The maximum conversion price for the bonds also decreased from €0.50 to €0.40.

On March 30, 2010, the Company's shareholders approved to increase authorized share capital from 200 million to 400 million and to adjust the nominal value per share from €0.50 to €0.04. These changes were legally formalized on April 1, 2010 as a result of which, at about 154.5 million shares outstanding, the Company's share capital in the second quarter 2010 decreased with €71.1 million with a corresponding increase of other reserves; the overall effect of the adjustment on total equity therefore is nil.

In the second quarter of 2010, Pharming issued a total number of 100 million shares at a price of €0.12 per share or €12.0 million on aggregate. Total fees and expenses associated with the transaction amounted to €1.3 million and have been charged to share premium within equity. At June 30, 2010, the Company has paid €0.8 million of fees and expenses and accordingly reports net cash proceeds of €11.2 million with payment of €0.4 other fees and expenses scheduled for the second half of 2010.

Due to the equity financing, the number of warrants issued to the 2010 bondholders further increased to about 58.8 million whereas the exercise price decreased to €0.12. In addition, the conversion price of the remaining bonds 2010 also decreased to €0.12. In the second quarter of this year, the 2010 bondholders received a total number of 407,475 shares as consideration for first quarter 2010 interest, and in addition, Pharming issued an aggregate number of 38,444,574 shares with a fair value of €9.2 million due to the conversion of €6.4 million nominal bonds (largely converted at the conversion price of €0.12). Also, a total of about 21.7 million warrants were exercised to the extent that 11,600,237 shares were issued to 2010 bondholders with an aggregate value of €2.8 million.

At June 30, 2010, the 2010 bondholders' right to convert the €1.1 million into shares at a conversion price of €0.12 (below the actual market price) and the potential value of the remaining 37.1 million cashless warrants together represent an additional right with an estimated fair value of about €4.9 million. This potential value has been presented as a derivative financial liability in the statement of financial position at June 30, 2010 but can fluctuate in subsequent periods as effected by the actual share price upon actual conversions or exercises. Such fluctuations may ultimately have a further impact, both positively and negatively, on the statements of financial position and income in the second half of 2010 and beyond.

In the fourth quarter of 2009, the Company settled nominal convertible debt of €24.9 million through payment in cash and a total number of 29,382,000 shares. The transaction included anti-dilution protection for these new shares which, as a result of the issuance of shares in the second quarter of 2010, as well as the various prices under which shares were issued, triggered the additional issuance of 12,536,035 shares. These shares, which will be transferred in the third quarter of 2010, are valued at €2.6 million and have been fully expensed in the second quarter of 2010 with a corresponding increase in equity. Additional shares may have to be transferred based on events occuring after June 30, 2010. The anti-dilution clauses terminate if the nominal value of outstanding bonds (currently €10.9 million) decreases to less than €7.0 million.

As a result of these transactions, the total number of outstanding ordinary shares at January 1, 2010 and March 31, 2010 of 154,501,037 increased to 304,953,323 at June 30, 2010. Overall, total equity of €13.3 million at December 31, 2009 decreased to €11.4 million at June 30. The €1.9 million decrease reflects the €25.5 million net effect of shares issued or to be issued and other charges of €0.6 million minus the first half 2010 net loss of €28.0 million.

As a result of the issuance of private bonds and shares, the Company raised a net amount of €18.7 million and significantly increased its net cash position from €2.3 million at year end 2009 to €9.8 million at the end of the first half 2010. Operating cash outflows in the first half of 2009, respectively 2010, were €13.4 million and €10.0 million due to a combination of the upfront payment received from SOBI, reduced operating costs and timing of various payments in both 2009 and 2010.

Financial results

In the first half year of 2010, the Company's income increased from €0.3 million to €0.4 million, which in both periods exclusively related to grants.

Total operational costs decreased from €14.6 million in the first half of 2009 to €12.1 million in the same period of 2010 as a result of capitalization of Ruconest/Rhucin development costs in 2010 (€0.3 million) and the timing of various expense items incurred in 2009. Such timing issues in particular relate to expenses incurred in the first half of 2009 in relation to very intensive activities related to the European Marketing Authorisation Application ("MAA") in Europe. These costs decreased considerably in 2010 since the filing was made in September 2009 and the regulatory process showed no major obstacles and at the end of the second quarter 2010, EMA's Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion on Ruconest for the treatment of acute angioedema attacks in patients with Hereditary Angioedema (HAE). The official granting of the MA by the European Commission is expected early September 2010 and will result in an additional (undisclosed) milestone payment by SOBI. Part of the cost reductions for the EMA filing have been offset with increased costs associated with activities regarding the US regulatory filing of Rhucin and the further development of indications in the field of transplantation such as antibody-mediated rejection and delayed graft function.

Financial and other income and expenses resulted in a €0.8 million loss in the first six months of 2009 and €16.3 million in the same period ended June 30, 2010. In 2009, these losses were reduced due to the effect of one-time profits of €3.1 million on bond conversions and fair value appreciation of marketable securities. For the first six months of 2010, the loss included the value of shares to be transferred to bondholders settled in 2009 (€2.6 million) and several adjustments in conversion and warrant rights granted to private bondholders engaged resulted in a net expense of €9.0 million. Also, effective interest charges on convertible bonds amounted to €3.1 million compared to €2.8 million in the first half of 2009.

The full half year report for the period ended June 30, 2010 can be found on Pharming's website.