Pharming Group Reports Strong Preliminary Financial Results for 2018 Including First Year of Net Profit
LEIDEN, Netherlands, March 7, 2019 /PRNewswire/ --
- Full year revenues from product sales were up over 51% on 2017 to €134.3 million, reflecting strong growth in both the USA and Europe. Including deferred license income, total revenues were €135.1 million (US$159.7 million) - an increase of almost 51% on 2017
- Fourth quarter product sales of €36.7m (US$41.9 million) - as guided; in similar range to Q3 2018
- 2018 US product sales triggered first $20 million milestone payment to Valeant, paid earlier this month
- Full year net profits, including financing costs and non-cash adjustments, were €25.0 million
- Full year unadjusted operating profit (EBIT) of €40.6 million (US$48.0 million), before a non-cash adjustment to take previously capitalised development costs for a superseded new form of RUCONEST through the income statement,, resulting in a final figure of €38.0 million (US$44.9 million)
- Cash ended at €81.5 million, an increase of €21.5 million versus year end 2017
Pharming Group N.V. ("Pharming" or "the Company") (Euronext Amsterdam: PHARM) presents its preliminary (unaudited) financial report for the full year ended 31 December 2018. The Company will hold a conference call at 13.00 CET/07.00 EST today. Dial in details can be found on page 11 of this report.
Chief Executive Officer Sijmen de Vries said:
"Throughout 2018, as for 2017, we continue to see consistent growth in the numbers of patients benefitting from RUCONEST in acute attacks of hereditary angioedema ("HAE"). The initial significant surge in growth was caused by patients starting RUCONEST therapy after we had provided unrestricted emergency treatments free of charge, to cope with the supply shortages of competitor plasma C1 inhibitor products. We retained many of these patients and added new patients throughout the year. The increasing sales from our growing patient base resulted in Pharming's first year of net profit, despite intense competitive pressure resulting from recent product launches. It also enabled us to increase investment to expand our pipeline, embarking on ambitious development plans for improved delivery methods for RUCONEST in HAE and for new larger indications. We also continued to advance our existing pipeline programs for Pompe disease and Fabry's disease. We are confident that with our increasing patient reach and advancing pipeline, we will to continue to deliver significant value to all our stakeholders."
Chief Executive Officer's Commentary
2018 was an exciting year for Pharming. We built on the strong foundations of the successful re-launch of RUCONEST in the USA in 2017, continuing impressive product sales growth from €88.7 million in 2017 to €134.3 million in 2018, an increase of 51%. As well as strong growth in the USA, we continued to develop RUCONEST in all key markets. In Europe, direct sales grew well during the year, particularly in the major markets of Western Europe, resulting in strong gains in France and the UK and continued growth in Germany, Austria and the Netherlands.
First year of Net Profits
As result of the steady sales growth, the Company was profitable at the net level in every quarter and for the year as a whole. Total net profit for the year ended at €25.0 million, representing a net margin of 19% and well ahead of analysts' forecasts. Operating profit for the year (i.e. EBIT), before a one-off small non-cash correction, almost doubled to €40.6 million (2017: €21.9 million on the same basis), representing an improved operating margin of 30% (2017: 24%). This was achieved despite significant investments in providing free-of-charge emergency support to patients during the stock outages of competitors at the start of the year.
As a result of the continued sales growth in the USA, we achieved the sales level required to trigger the first US$20 million milestone payment due to Bausch Health Companies Inc. (formerly Valeant Pharmaceuticals International, Inc.) which was duly made earlier this week. If sales growth continues at or near the current level, the remaining US$45 million milestones will also be triggered in this or future years.
As a result, we have prudently made a (non-cash) provision for additional fair value of the contingent consideration in the balance sheet, and a corresponding charge to the profit and loss account, of €21.2 million ($25.0 million).
In addition, the increasing profitability of Pharming means that we are likely to be able to use all of our accumulated net operating tax losses, and so we have increased the deferred tax asset which recognises these by a net amount of €25.6 million (2017: €9.4 million), being mainly the tax effect of the total accumulated losses to date in the Netherlands. These two provisions reflect our strong confidence in the performance of our US and EU commercial teams and patients' increasing confidence in the use of RUCONEST as their therapy of choice to treat attacks of HAE.