Pharming Group reports financial results for the first half of 2021

Recovery continued into Q2 2021 as patient enrollment and product demand increases LEIDEN, The Netherlands, Aug. 5, 2021 /PRNewswire/…

Recovery continued into Q2 2021 as patient enrollment and product demand increases

LEIDEN, The Netherlands, Aug. 5, 2021 /PRNewswire/ — Pharming Group N.V. («Pharming» or «the Company») (Euronext Amsterdam: PHARM/NASDAQ: PHAR) presents its preliminary (unaudited) financial report for the first six months of 2021 ended June 30, 2021.

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  • The Company will hold an analyst conference call at 13.00 CET/07.00 ET today. Dial in details can be found on page 7 of this report
  • The Company will also hold a webinar at 19:00CET. Registration details can be found on the Company’s website: www.pharming.com

Financial Summary

Amounts in US$m except per share data

H1 2021

H1 2020

% Change





Income Statement




Revenues

93.2

97.8

(5)%

Gross profit

83.8

86.9

(4)%

Operating profit

17.2

35.7

(52)%

Profit for the year

14.4

20.3

(29)%

Balance Sheet




Cash & marketable securities

189.8

173.8

9%

Share Information




Basic earnings per share (US$)

0.022

0.032

(31)%

Diluted earnings per share (US$)

0.019

0.028

(32)%

Financial highlights

  • Total revenues for the first half of 2021 came to US$93.2 million, a 5% decrease from the first half of 2020 US$97.8 million.  However, revenues in Q2 2021 increased by 15% to US$49.7 million, compared to US$43.4 million in Q2 2020. Revenues in Q2 2021 also increased by 14% compared to US$43.6 million in Q1 2021. As previously noted in our Q1 2021 financial release, Q1 2021 saw the US healthcare economy significantly affected by the second wave of COVID 19 to hit the US. In Q2 2021 doctors’ offices reopened and diagnostic and routine patient appointments initiated a recovery across the pharmaceutical sector and for RUCONEST® (recombinant human C1 esterase inhibitor, or «rhC1INH») sales.
  • The start of the RUCONEST® recovery in the US during Q2 2021 was driven by an increase in new patients and product demand. For the first half of 2021 revenue from US sales amounted to US$90.1 million a 4% decrease from US$93.9 million in the first half of 2020. However, US sales revenues in Q2 2021 increased by 16% to US$48.4 million fromUS$41.6 million in Q1 2021.
  • Sales revenues in Europe and Rest of World (RoW) decreased to US$3.2 million in the first half of 2021 (H1 2020: US$4.0 million) In Q2 2021 revenue from Europe and RoW sales was US$1.2 million a decrease of 36% on Q1 2021 $1.96 million, mainly as a result of phasing of ordering.
  • Gross profit for first half year of 2021 amounted to US$83.8 million a decrease of 4% in comparison to H1 2020 (US$86.9 million). However, gross profit for Q2 2021 increased by 17% to US$45.0 million compared to US$38.4 million in Q2 2020 and by 16% compared to Q1 2021, in line with the increased revenues.
  • Operating profit for the first half of 2021 amounted to US$17.2 million, a 52% decrease from H1 2020 (US$35.7 million). Operating profit for Q2 2021 decreased by 23% to US$10.9 million compared to Q2 2020 (US$14.2 million) but increased by 73% compared to Q1 2021 (US$6.3 million).
  • Other operating costs increased to US$68.0 million compared to US$51.8 million in the first half year of 2020. The increase was a combination of increased R&D expenditure, investments in launch preparation and manufacturing cost for leniolisib, an increase in employee numbers supporting company growth, a significant increase in cost of insurances, an increase in share-based compensation and increased compliance and control costs.
  • Net profit for H1 2021 came to US$14.4 million a 29% decrease in comparison to H1 2020 (US$20.3 million), as a result of lower operating profit offset by currency results and lower funding costs.
  • Cash and cash equivalents, together with restricted cash decreased from US$206.7 million at the end of 2020 to US$189.8 million at the end of Q2 2021. This was as a result of positive cash flow from operating activities (US$16.4 million) reduced by investments and the payment of the final $25 million milestone payment in Q2 2021 to Bausch Health Inc. relating to the re-acquisition of the North American RUCONEST® commercialization rights in 2016.

Operational highlights

  • Reimbursement of RUCONEST® agreed with the Spanish Ministry of Health for the treatment of acute hereditary angioedema (HAE) attacks in Spain.
  • Announced the successful completion of patient enrollment in the pivotal Phase 2/3 triple-blind, randomized, placebo-controlled study of leniolisib for the treatment of activated phosphoinositide 3-kinase delta (PI3Kδ) syndrome (APDS). The anticipated launch of leniolisib is in Q4 2022, subject to regulatory approval.
  • Announced the launch of navigateAPDS, a sponsored genetic testing program in collaboration with Invitae Corporation (NYSE: NVTA) designed to assist clinicians in identifying patients and their family members with activated PI3K delta syndrome (APDS), which may lead to earlier diagnosis.
  • The first patient was enrolled in a Phase IIb double-blind, randomized, controlled study to assess the efficacy of RUCONEST®, for the prevention of acute kidney injury after non-ST elevation myocardial infarction at the University Hospital Basel, Switzerland.
  • Upon nomination by the Board of Directors, the Company’s Annual General Meeting of Shareholders that was held on 19 May 2021 appointed Steven Baert, Leon Kruimer and Jabine van der Meijs as Non-Executive Directors to the Board.
  • Appointed Anurag Relan as Chief Medical Officer and Robert Friesen as Chief Scientific Officer.

Post-period operational highlights

  • Entered into an exclusive license agreement with NewBridge Pharmaceuticals for the distribution of RUCONEST® in the Middle East and North Africa.
  • Announced a strategic collaboration with Orchard Therapeutics, a global gene therapy leader, to research, develop, manufacture and commercialize OTL-105, a newly disclosed investigational ex-vivo autologous hematopoietic stem cell (HSC) gene therapy for the treatment of HAE. OTL-105 is designed to increase C1 esterase inhibitor (C1INH) in HAE patient serum to prevent HAE attacks.

Chief Executive Officer, Sijmen de Vries, commented:

«As expected, revenue growth during Q2 2021 has continued to recover, following the impact of COVID-19 on Q1 2021, as underlying demand and patients benefiting from RUCONEST® treatments for their HAE increases. We are confident this positive trend will continue for the remainder of the year and, supported by our strong cash position, will enable us to continue our planned investment in R&D and the ongoing preparations for the launch of leniolisib, which, subject to regulatory approval, is on track for the end of 2022 following the completion of patient enrollment in the potentially registration enabling study in APDS.

In our earlier pipeline, we initiated enrollment of patients in a multi-center Phase IIb clinical trial of rhC1INH for the prevention of acute kidney injury after myocardial infarction. In addition, post period, we delivered on one of our strategic objectives to strengthen our longer-term HAE pipeline, through a collaboration with Orchard Therapeutics, to develop and commercialize the pre-clinical ex-vivo autologous hematopoietic stem cell therapy product OTL-105, which has the potential to become a curative treatment for HAE. We remain focused on the positive progress against our three-pillar strategy of sales, R&D and acquisitive growth.»  

Outlook

For the remainder of 2021, we expect:

  • Continued increase in revenues from the sales of RUCONEST®, as a result of the pharmaceutical market continuing to normalize and return to its pre-COVID 19 state. We will though continue to monitor the situation in all markets and continue to expect some periodic disruptions.
  • Maintenance of positive net earnings during the year.
  • Investments in acquisitions and in-licensing of new development opportunities and assets.
  • Continued investment in the expansion of production facilities, both for RUCONEST® and leniolisib.
  • Investment in launch-critical medical affairs and pre-marketing activities for leniolisib and the registration-enabling study for APDS, as well as our ongoing clinical trials for rhC1INH and other development activities, including OTL-105.

No further specific financial guidance for 2021 is provided.

About Pharming Group N.V.

Pharming Group N.V. is a global, commercial stage biopharmaceutical company developing innovative protein replacement therapies and precision medicines for the treatment of rare diseases and unmet medical needs.

The flagship of our portfolio is our recombinant human C1 esterase inhibitor (rhC1INH) franchise. C1INH is a naturally occurring protein that down regulates the complement and contact cascades in order to control inflammation in affected tissues.

Our lead product, RUCONEST®, is the first and only plasma-free rhC1INH protein replacement therapy. It is approved for the treatment of acute hereditary angioedema (HAE) attacks. We are commercializing RUCONEST® in the United States, the European Union and the United Kingdom through our own sales and marketing organization, and the rest of the world through our distribution network.

In addition, we are investigating the clinical efficacy of rhC1INH in the treatment of further indications, including pre-eclampsia, acute kidney injury and severe pneumonia as a result of COVID-19 infections.

We are also studying our oral precision medicine, leniolisib (a phosphoinositide 3-kinase delta, or PI3K delta, inhibitor), for the treatment of activated PI3K delta syndrome, or APDS, in a registration enabling Phase 2/3 study in the United States and Europe.

Furthermore, we are leveraging our transgenic manufacturing technology to develop next-generation protein replacement therapies, most notably for Pompe disease, which is currently in preclinical development.

Forward-looking Statements

This press release contains forward-looking statements, including with respect to timing and progress of Pharming’s preclinical studies and clinical trials of its product candidates, Pharming’s clinical and commercial prospects, Pharming’s ability to overcome the challenges posed by the COVID-19 pandemic to the conduct of its business, and Pharming’s expectations regarding its projected working capital requirements and cash resources, which statements are subject to a number of risks, uncertainties and assumptions, including, but not limited to the scope, progress and expansion of Pharming’s clinical trials and ramifications for the cost thereof; and clinical, scientific, regulatory and technical developments. In light of these risks and uncertainties, and other risks and uncertainties that are described in Pharming’s 2020 Annual Report and the Annual Report on Form 20-F for the year ended December 31, 2020 filed with the U.S. Securities and Exchange Commission, the events and circumstances discussed in such forward-looking statements may not occur, and Pharming’s actual results could differ materially and adversely from those anticipated or implied thereby. Any forward-looking statements speak only as of the date of this press release and are based on information available to Pharming as of the date of this release.

Inside Information

This press release relates to the disclosure of information that qualifies, or may have qualified, as inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation.

For further public information, contact:

Pharming Group, Leiden, The Netherlands

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

Susanne Embleton, Investor Relations Manager: T: +31 71 524 7400 E: investor@pharming.com

FTI Consulting, London, UK

Victoria Foster Mitchell/Alex Shaw

T: +44 203 727 1000

LifeSpring Life Sciences Communication, Amsterdam, The Netherlands

Leon Melens

T: +31 6 53 81 64 27

E: pharming@lifespring.nl

Conference call dial-in information

Thursday August 5, 2021 13:00CET/07:00ET

Please note, the Company will only take questions from dial-in attendees.

Dial-in details:

Netherlands (Local)        085 888 7233

United Kingdom              0800 640 6441

United Kingdom (Local) 020 3936 2999

All other locations          +44 20 3936 2999

Access code: 914296

Webcast Link:

https://webcast.openbriefing.com/pharming-aug21/

Pharming Group N.V.

Condensed Consolidated Interim Financial Statements in US Dollars (unaudited)

For the period ended 30 June 2021

  • Condensed consolidated statement of profit and loss
  • Condensed consolidated statement of comprehensive income
  • Condensed consolidated balance sheet
  • Condensed consolidated statement of changes in equity
  • Condensed consolidated statement of cash flow

Appendix: Main condensed consolidated Interim Financial Statements reported in Euros

(This appendix is not part of the Condensed Consolidated Financial Statements)

  • Condensed consolidated statement of profit and loss in Euros
  • Condensed consolidated statement balance sheet in Euros
  • Condensed consolidated statement of cash flows in Euros

CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS




For the 6-month period ended 30 June








Amounts in $ ‘000

notes

HY2021

HY 2020





Revenues

7

93,237


97,827

Costs of sales

8

(9,487)


(10,885)

Gross profit


83,750


86,942

Other income


1,354


525

Research and development


(24,206)


(17,658)

General and administrative


(15,060)


(9,846)

Marketing and sales


(28,686)


(24,283)

Other Operating Costs

8

(67,952)


(51,787)

Operating profit


17,152


35,680

Fair value gain (loss) on revaluation derivatives


44


93

Other finance income

9

5,398


1,237

Other finance expenses

9

(2,958)


(8,252)

Finance gain (cost) net


2,484


(6,922)

Share of net profits in associates using the equity method

10

388


134

Profit before tax


20,024


28,892

Income tax credit (expense)


(5,672)


(8,561)

Profit for the year


14,352


20,331

Basic earnings per share (US$)

17

0.022


0.032

Diluted earnings per share (US$)

17

0.019


0.028

        


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME



For the 6-month period ended 30 June






Amounts in US$ ‘000

HY 2021

HY 2020

Profit for the year

14,352

20,331

Currency translation differences

(5,582)

39

Items that may be subsequently reclassified to profit or loss

(5,582)

39

Other comprehensive income (loss), net of tax

(5,582)

39

Total comprehensive income (loss) for the year

8,770

20,370

    

 


CONDENSED CONSOLIDATED BALANCE SHEET




as at 30 June

 








Amounts in $ ‘000

notes

June 30, 2021

31 December 2020

Non-current assets




Intangible assets


91,386


94,083

Property, plant and equipment

11

15,588


12,226

Right-of-use assets

12

22,043


9,427

Deferred tax assets

13

23,925


31,877

Investments accounted for using the equity method

10

7,261


7,118

Restricted cash


493


510

Total non-current assets


160,696


155,241

Current assets




Inventories

14

24,307


21,157

Trade and other receivables


37,550


35,902

Restricted cash


987


995

Cash and cash equivalents


188,303


205,159

Total current assets


251,147


263,213

Total assets


411,843


418,453





Equity




Share capital


7,251


7,163

Share premium


453,014


444,940

Legal reserves


14,665


19,859

Accumulated deficit


(276,858)


(288,527)

Shareholders’ equity

15

198,072


183,435

Non-current liabilities




Convertible bonds

16

145,437


149,727

Lease liabilities

12

20,328


8,230

Other financial liabilities


189


212

Total non-current liabilities


165,954


158,169

Current liabilities




Convertible bonds

16

1,972


2,040

Derivative financial liabilities


71


181

Trade and other payables


43,123


47,666

Lease liabilities


2,651


1,962

Other financial liabilities



25,000

Total current liabilities


47,817


76,849

Total equity and liabilities


411,843


418,453





 

 

CONDENSED CONSOLIDATED STATEMENT CHANGES IN EQUITY




For the period ended 30 June




Attributable to owners of the parent

Amounts in $ ‘000

notes

Number of shares

(in ‘000)

Share capital

Share premium


Balance at 1 January 2020 as reported in HY report


631,323

7,079


439,887

Result for the half-year



Other comprehensive income (loss) for the half-year



Total comprehensive income (loss) for the half-year



Legal reserves development expenses



Share-based compensation



Bonuses settled in shares



Value of conversion rights on convertible bonds



Shares issued for cash


2,061

23


1,534

Warrants exercised/ issued



Options exercised


4,319

47


2,626

Total transactions with owners, recognized directly in

equity


6,380

70


4,160

Balance at 30 June 2020


637,703

7,149


444,047






Balance at 1 January 2021

17

638,822

7,163


444,940

Result for the year



Other comprehensive income (loss) for the half-year



Total comprehensive income (loss) for the half-year



Legal reserves development expenses



Income Tax expense from excess tax deductions related to Share-based payments



Share-based compensation


176

2


264

Bonuses settled in shares



Shares issued for cash



Warrants exercised/ issued


61

1


20

Options exercised


7,064

85


7,790

Total transactions with owners, recognized directly in equity

17

7,301

88


8,074

Balance at 30 June 2021

17

646,123

7,251


453,014















     

CONDENSED CONSOLIDATED STATEMENT CHANGES IN EQUITY






For the period ended 30 June






Attributable to owners of the parent


Amounts in $ ‘000

notes

Legal reserves

Accumulated deficit

Total equity



Capitalized development cost

Translation reserve



Balance at 1 January 2020 as reported in HY report


4,874

(705)

(333,749)

117,387

Result for the half-year


20,331

20,331

Other comprehensive income (loss) for the half-year


39

39

Total comprehensive income (loss) for the half-year


39

20,331

20,370

Legal reserves development expenses


62

(62)

Share-based compensation


1,530

1,530

Bonuses settled in shares


Value of conversion rights on convertible bonds


1,552

1,552

Shares issued for cash


(1,557)

Warrants exercised/ issued


Options exercised


(558)

2,115

Total transactions with owners, recognized directly in equity


62

905

5,197

Balance at 30 June 2020


4,936

(666)

(312,513)

142,954





Balance at 1 January 2021


5,632

14,227

(288,527)

183,435

Result for the year


14,352

14,352

Other comprehensive income (loss) for the half-year


(5,582)

(5,582)

Total comprehensive income (loss) for the half-year


(5,582)

14,352

8,770

Legal reserves development expenses


388

(388)

Income Tax expense from excess tax deductions related to Share-based payments


(1,794)

(1,794)

Share-based compensation


3,527

3,793

Bonuses settled in shares


Shares issued for cash


Warrants exercised/ issued


21

Options exercised


(4,028)

3,847

Total transactions with owners, recognized directly in equity


388

(2,683)

5,867

Balance at 30 June 2021


6,020

8,645

(276,858)

198,072














    



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS



For the 6-month period ended 30 June



Amounts in $’000

HY 2021

HY 2020

Profit before tax

20,024

28,892

Non-cash adjustments:



Depreciation, amortization, impairment

4,518

3,447

Equity settled share-based payments

3,793

1,536

Fair value gain (loss) on revaluation of derivatives

(44)

(93)

Other finance income

(5,398)

(1,238)

Other finance expense

2,958

8,252

Share of net profits in associates using the equity method

(388)

(134)

Other

229

(36)

Operating cash flows before changes in working capital

25,692

40,626

Changes in working capital:


Inventories

(3,150)

(1,939)

Trade and other receivables

(1,649)

(717)

Payables and other current liabilities

(4,542)

6,435

Restricted Cash

24

(4)

Total changes in working capital

(9,317)

3,775

Interest received

43

529

Income taxes paid

(55)




Net cash flows generated from (used in) operating activities

16,418

44,875



Capital expenditure for property, plant and equipment

(5,436)

(1,143)

Investment intangible assets

(1,206)

(254)

Investment in associate

(14)

Acquisition of license

(1,083)

(8,767)



Net cash flows used in investing activities

(7,725)

(10,178)

Repayment on loans and borrowings

(55,117)

Payment on contingent consideration

(25,000)

(20,025)

Payment of lease liabilities

(1,618)

(1,548)

Proceeds of issued convertible bonds

135,470

Interests on loans and leases

(2,261)

(795)

Proceeds of equity and warrants

3,867

2,116



Net cash flows generated from (used in) financing activities

(25,012)

60,101

Increase (decrease) of cash

(16,319)

94,798

Exchange rate effects

(537)

2,062

Cash and cash equivalents at 1 January

205,159

74,348



Total cash and cash equivalents at 30 June

188,303

171,208

Notes to the condensed consolidated financial statements

For the period ended 30 June 2021

1. Company information

Pharming Group N.V. is a limited liability public company which is listed on Euronext Amsterdam (PHARM) and on the NASDAQ (PHAR), with its headquarters and registered office located at:

Darwinweg 24

2333 CR Leiden

The Netherlands

2. Basis of preparation

The consolidated interim financial statements for the six-month period ended 30 June 2021 have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS interpretations committee (IFRS IC) interpretations applicable to companies reporting under IFRS as endorsed by the European Union and valid as of the balance sheet date. The consolidated financial statements have been prepared under the historical cost convention. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2020.

3. Accounting policies

Accounting policies are consistent with those of the financial statements for the year ended 31 December 2020.

4. Estimates and judgements

The preparation of interim financial statements in conformity with IFRS and Book 2 Title 9 of the Dutch Civil Code 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 applied to the consolidated financial statements for the year ended 31 December 2020.

5. Going concern

In preparing and finishing the interim financial statements the Board of Directors of Pharming have assessed the Company’s ability to fund its operations for a period of at least twelve months after the date the interim financial statements are issued. Based upon the assessment on a going concern basis, the Company has concluded that funding of its operations for a period of twelve months, after the date the interim financial statements are issued, is realistic and achievable. Overall, based on the outcome of this assessment, the interim financial statements have been prepared on a going concern basis.

6. Seasonality of operations

Seasonality has no material impact on Company’s interim financial statements.

7. Segment information

The Board of Directors consider the business from both a product and  geographic perspective. From a product perspective, the Company’s business is exclusively related to the recombinant human C1 esterase inhibitor business. From a geographic perspective, the Company is operating in the US, Europe and RoW. The Board of Directors primarily measures revenues and gross profit to assess the performance of the geographic areas. Operating costs as well as non-current assets are not sub-allocated to the geographic areas.

Total revenues and gross profit per geographic segment for the period ended 30 June:

Amounts in US$ ‘000

HY 2021

HY 2020

Revenues:



US

90,079

93,839

Europe & RoW

3,158

3,988

Total revenues

93,237

97,827

Gross profit:



US

82,505

85,102

Europe & RoW

1,245

1,840

Total gross profit

83,750

86,942

8. Expenses by nature

Cost of sales in the first half year of 2021 amounted to US$9.5 million (HY 2020: US$10.9 million) and relate to actual product sales.

Other operating costs increased to US$68.0 million compared to US$51.8 million in the first half year of 2020. The increase was a combination of increased R&D expenditure, launch preparation and manufacturing cost for leniolisib, an increase in employee numbers supporting company growth (US$6 million), a significant increase in cost of insurances (US$2.8 million), an increase in share-based compensation (US$3 million) and increased compliance and control costs.

Employee benefits

Employee benefits are charged to research and development costs, general and administrative costs or marketing and sales costs based on the nature of the services provided.

Depreciation and amortization charges

Depreciation and amortization charges

 

 

 






Amounts in US$ ‘000

HY 2021

HY 2020

Property, plant and equipment

(1,044)

(761)

Right-of-use assets

(1,385)

(710)

Intangible assets

(2,089)

(1,593)

Total

(4,518)

(3,064)

The increase of depreciation charges of property, plant and equipment in 2021 as compared to 2020 stems from new investments, mainly in production assets.

The depreciation on right-of-use assets relates to leased buildings and cars. At the end of the year 2020 and in Q1 2021 additions to leased buildings were made to support the growth of Pharming.

The amortization of the intangible assets mainly relates to the re-acquired US commercialization rights and are allocated to marketing and sales expenses.

9. Financial income (expenses)

Amounts in US$ ‘000

HY 2021

HY 2020

Foreign currency results

5,355

700

Interest income

43

537

Other financial income

5,398

1,237

Foreign currency results

-1

296

Interest loans and borrowings

(496)

Settlement fees and expenses on repayment loan

(4,054)

Interest on convertible bonds

(2,667)

(2,147)

Other interest expenses

(479)

(422)

Contingent consideration

253

(1,343)

Other financial expenses

(64)

(86)

Other financial expenses

(2,958)

(8,252)




Total other financial income and expenses

2,440

(7,015)

Foreign currency results in the EUR functional currency entities, primarily follow from the revaluation of bank balances and the loan which are denominated in foreign currencies, mainly US dollars. The US dollar strengthened over the course of 2021. The indicated settlement fees and expenses on repayment loan HY 2020 relates to the repayment in full of the loan from Orbimed Advisors.

10. Share of net profit in associate using the equity method

In the Board of Director’s judgement, the investment in BioConnection constitutes an investment in an associated company and is therefore not consolidated, as Pharming has significant influence but does not have control of BioConnection and is embargoed by a shareholders agreement between the shareholders of BioConnection from influencing any activity between the two parties which is in any significant way different from the relationship which existed between the two prior to the investment. In addition to its carrying value for the investment, Pharming’s risk is limited to the provision of a €3 million corporate guarantee in favor of ABN AMRO Bank in the unlikely event that BioConnection were to default on all its debts and its assets did not meet the outstanding liabilities owing to ABN AMRO Bank. In the opinion of the Board of Directors, the fact that BioConnection is a growing profitable company which has met all its obligations as they fell due since inception makes the likelihood of this guarantee ever being used very small. The guarantee is accounted for under IFRS 9 and appears as financial guarantee liabilities in Other financial liabilities.

The carrying amount of this investment has changed as follows:

Amounts in US $ ‘000

30 June

2021

31 December

2020

Balance at 1 January

7,118

6,764

Amortization of financial guarantee

(17)

(34)

Profit (loss) for the period

388

361

Foreign exchange rate movements

(228)

27

Balance at end of period

7,261

7,118

11. Property, plant and equipment

The expansion of the property, plant and equipment mainly relates to assets under construction reflecting the expansion of the milk production capacity and the construction of a downstream manufacturing facility.

12. Right-of-use assets and lease liabilities non-current and current

The change in the right of use asset is mainly caused by the addition of a new lease. This represents an increase of $13.5 million. The new lease contract includes an expansion of the site and an extension of historic leases. The term of the new contract is 15 years.

13. Deferred tax assets

The deferred tax asset decreased mainly due to offsetting the current tax expense with unused tax losses from prior years.

14. Inventories

Inventories include batches RUCONEST®, work in progress and skimmed milk available for production of RUCONEST®.

Amounts in US$ ‘000

30 June

2021

31 December

2020

Finished goods

14,518

12,742

Work in progress

6,178

5,668

Raw materials

3,611

2,747

Balance at end of period

24,307

21,157






Changes in the adjustment to net realizable value:

Amounts in US $ ‘000

Period to

30 June

2021

Period to

31 December

2020

Balance at 1 January

(646)

(931)

Addition to impairment

-363

-1,450

Release of impairment

21

1,192

Usage of impairment

342

606

Foreign exchange rate movements

20

-63

Balance at end of period

(626)

(646)

The inventory valuation at 30 June 2021 of US$24.3 million is stated net of an impairment of US$0.6 million (2020: US$0.6 million). The impairment includes an impairment for obsolescence and an impairment to write inventories down to their net realizable value.

Per 30 June 2021 the impairment for obsolescence amounts to US$0.0 million similar to 31 December 2020.

Per 30 June 2021 the impairment to write inventories down to their net realizable value amount to US$0.6 million (2020: US$0.6 million). Inventories are available for use in commercial, preclinical and clinical activities. Estimates have been made with respect to the ultimate use or sale of product, taking into account current and expected sales as well as preclinical and clinical programs. These estimates are reflected in the additions to the impairment.

The releases to the impairment relate to amendments to the estimates as a result of the fact that actual sales can differ from forecasted sales and the fact that vials allocated to preclinical and clinical programs can be returned to inventory.

The costs of vials used in preclinical and clinical programs are presented under the research and development costs.

The main portion of inventories at 30 June 2021 have expiration dates starting beyond 2022 and are all expected to be sold and/or used before expiration.

15. Equity

The Company’s authorized share capital amounts to €8.8 million and is divided into 880,000,000 ordinary shares with a nominal value of €0.01 each. All 646,123,246 shares outstanding at 30 June 2021 have been fully paid-up. Other reserves include those reserves related to currency translation, share-based compensation expenses and other equity-settled transactions.

Please refer to the Condensed Consolidated Statement changes in Equity.

16. Convertible bonds

On January 21, 2020, the Company issued €125 million aggregate principal amount of 3.00% convertible bonds due 2025.

The convertible bonds comprise of two components. The first component is a financial liability, which represents our contractual obligation to deliver cash or another financial asset for payment of interest and principal, if not converted. The second component is an equity instrument as it represents a written call option granting the holder the right, for a specified period of time, to convert it into a fixed number of the Company’s ordinary shares.

The fair value of the consideration in respect of the liability components is measured at the fair value of a similar liability that does not have any associated equity conversion option (IFRS 9 paragraph 5.1.1). This is the liability component’s carrying amount at initial recognition.

The equity component will be measured at the residual difference between the nominal value and the fair value of a similar liability that does not have any associated equity conversion option (IAS 32 paragraph 31). The original equity component as recorded at initial recognition amounts to €1.4 million.

Recognition and movements of the convertible bonds were as follows:

Amounts in US$ ‘000

Period to

30 June

2021

Period to

31 December

2020

Balance at 1 January

151,767

Carrying value initial recognition

138,571

Interest paid (cash flow)

(2,262)

(2,142)

Amortization transaction cost

744

Accrued interest

2,667

4,040

Foreign exchange rate movements

(4,763)

10,554

Carrying value at end of period

147,409

151,767

17. Earnings per share and diluted shares

Basic earnings per share is calculated based on the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is computed based on the weighted average number of ordinary shares outstanding including the dilutive effect of shares to be issued in the future under certain arrangements such as option plans and warrants issued. For HY 2021 and HY2020, the basic and diluted profit (loss) per share is:





HY 2021

HY 2020

Net profit (loss) attributable to equity owners of the parent (in US $ ‘000)

14,352

20,331

Weighted average shares outstanding (in ‘000)

641,299

634,156

Basic profit (loss) per share (in US $)

0.022

0.032

Weighted average fully-diluted shares outstanding (in ‘000)

762,115

738,277

Fully-diluted profit per share (in US $)

0.019

0.028

Diluted shares

The composition of the number of shares and share rights outstanding as well as authorized share capital as per 30 June 2020 is provided in the table below:


31 December

2020

Shares issued

Shares

reserved

30 June 2021

Issued shares

638,821,619

7,301,627

646,123,246

Warrants

148,944

(60,915)

88,029

Options

50,106,488

(6,552,813)

43,553,675

Convertible bonds

62,412,622

62,412,622

LTIP

9,979,208

1,439,045

11,418,253

Fully-diluted shares

761,468,881

2,126,944

763,595,825

Available for issue

118,531,119

(2,126,944)

116,404,175

Authorized share capital

880,000,000

880,000,000

18. Events since the end of the reporting period

The financial effects of the partnership with Orchard Therapeutics are excluded from the June 2021 financials as the partnership agreement was signed after 30 June.

Appendix: Main Condensed Consolidated Financial Statements reported in Euro’s

These statements are not part of the original Interim Financial Statements. The original Interim Financial Statements are reported in US Dollars. In case of differences of interpretation between the Financial Statements in US dollars and the Financial Statements in Euros, the Financial Statements in US Dollars will prevail.

Exchange rates (USD:EUR) used:


Statement of income YTD 2020

1.1042

Statement of income YTD 2021

1.2061

Balance sheet at June 2020

1.1206

Balance sheet at December 2020

1.2280

Balance sheet at June 2021

1.1895

Cash flow YTD 2020

1.1042

Cash flow YTD 2021

1.2061

Cash balance as per 1 January 2020

1.1214

Cash balance as per 31 December 2020

1.2280

Cash balance as per 1 January 2021

1.2280

Cash balance as per 30 June 2021

1.1895


    

CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS – EUR



For the 6-month period ended 30 June






Amounts in € ‘000

HY 2021

HY 2020

Revenues

77,304

88,593

Costs of sales

(7,866)

(9,858)

Gross profit

69,438

78,735

Other income

1,123

475

Research and development

(20,070)

(15,991)

General and administrative

(12,486)

(8,917)

Marketing and sales

(23,784)

(21,991)

Other Operating Costs

(56,340)

(46,899)

Operating profit

14,221

32,311

Fair value gain (loss) on revaluation derivatives

36

84

Other finance income

4,475

1,121

Other finance expenses

(2,453)

(7,741)

Finance gain (cost) net

2,058

(6,536)

Share of net profits in associates using the equity method

321

121

Profit before tax

16,602

25,896

Income tax expense

(4,703)

(7,753)

Profit for the year

11,899

18,143

Basic earnings per share (€)

0.019

0.029

Fully-diluted earnings per share (€)

0.016

0.025

   

CONDENSED CONSOLIDATED BALANCE SHEET – EUR




as at 30 June








Amounts in € ‘000

30 June

2021

31 December 2020


Non-current assets




Intangible assets

76,827

76,615


Property, plant and equipment

13,104

9,956


Right-of-use assets

18,531

7,676


Deferred tax assets

20,113

25,957


Investments accounted for using the equity method

6,104

5,796


Restricted cash

415

415


Total non-current assets

135,094

126,415


Current assets




Inventories

20,434

17,229


Trade and other receivables

31,569

29,236


Restricted cash

830

810


Cash and cash equivalents

158,304

167,068


Total current assets

211,137

214,343






Total assets

346,231

340,758






Equity




Share capital

6,096

6,388


Share premium

380,856

396,799


Legal reserves

12,328

4,341


Accumulated deficit

(232,764)

(258,151)


Shareholders’ equity

166,516

149,377


Non-current liabilities




Convertible bonds

122,267

121,927


Lease liabilities

17,090

6,702


Other financial liabilities

159

173


Total non-current liabilities

139,516

128,802






Current liabilities




Convertible bonds

1,657

1,661


Derivative financial liabilities

60

147


Trade and other payables

36,253

38,816


Lease liabilities

2,229

1,598


Other financial liabilities


20,357


Total current liabilities

40,199

62,579






Total equity and liabilities

346,231

340,758


 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS – EUR



For the 6-month period ended 30 June






Amounts in €’000

HY 2021

HY 2020

Profit before tax

16,602

25,896

Non-cash adjustments:



Depreciation, amortization, impairment

3,745

3,122

Equity settled share based payments

3,146

1,391

Fair value gain (loss) on revaluation of derivatives

(36)

(84)

Other finance income

(4,475)

(1,121)

Other finance expense

2,453

7,741

Share of net profits in associates using the equity method

(321)

(121)

Other

190

(33)

Operating cash flows before changes in working capital

21,304

36,791

Changes in working capital:



Inventories

(2,611)

(1,756)

Trade and other receivables

(1,367)

(649)

Payables and other current liabilities

(3,766)

5,828

Restricted Cash

20

(4)

Total changes in working capital

(7,724)

3,419




Interest received

35

479

Income taxes paid

(50)




Net cash flows generated from (used in) operating activities

13,615

40,639

Capital expenditure for property, plant and equipment

(4,507)

(1,035)

Investment intangible assets

(1,000)

(230)

Investment in associate

(13)

Acquisition of license

(898)

(7,939)




Net cash flows used in investing activities

(6,405)

(9,217)

Repayment on loans and borrowings

(49,914)

Payment on contingent consideration

(20,728)

(18,135)

Payment of lease liabilities

(1,342)

(1,402)

Proceeds of issued convertible bonds

122,682

Interests on loans and leases

(1,875)

(720)

Proceeds of equity and warrants

3,206

1,916




Net cash flows generated from (used in) financing activities

(20,739)

54,427

Increase (decrease) of cash

(13,529)

85,849

Exchange rate effects

4,765

634

Cash and cash equivalents at 1 January

167,068

66,299




Total cash and cash equivalents at 30 June

158,304

152,782











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