LEIDEN, The Netherlands,
October 30, 2014 /PRNewswire/ --
Biotech company Pharming Group NV
("Pharming" or "the Company") (NYSE Euronext: PHARM) today
published its financial report for the nine months ended
30 September 2014.
FINANCIAL HIGHLIGHTS
- Revenues from product sales increased to €2.2 million, as a
result of underlying demand in the EU markets (9M 2013: €0.6
million).
- Revenues from license fees decreased to €1.6 million (9M 2013:
€5.4 million) due to the receipt of a US$5
million milestone in 2013.
- Operating costs increased by €1.6 million to €10.9 million (9M
2013: €9.3 million) mainly as a result of increasing activities,
including the start of a Phase II clinical study of Ruconest® for
prophylaxis for HAE, and the expenses of the (non-cash) share-based
compensation
- Net financial expenses amounted to €9.2 million (9M 2013: €7.4
million). The increase is due to the (non-cash) revaluation of our
warrants resulting from the strong increase in our share price
during 9M 2014.
- Loss from operating activities increased by €6.0 million to
€9.7 million, as a result of the receipt of a US$5 million milestone payment in 2013, the
increase of operating costs of €1.6 million and a €0.5 million
impairment on inventory, reflecting the current low yield on EU
sales.
- Total net loss increased by €7.8 million to €18.9 million (9M
2013: €11.1 million), as a result of the €6.0 million increase of
loss of operating activities and the €1.8 million increase in the
(non- cash) financial expenses.
- Cash outflows from operations increased by €6.6 million to
€13.7 million during 9M 2014 (9M 2013: €7.1 million), mainly as a
result of the €7.3 million increase in manufacturing activities for
Ruconest®, ahead of the anticipated US launch in 4Q 2014.
- Cash at the end of the first nine months of 2014 increased to
€23.8 million (2013 FY: €19.2 million).
- The equity position increased from €5.0 million at year end
2013 to €15.9 million, mainly as a result of the private equity
placement of net €14.0 million in April
2014 and the exercise of warrants.
- The net profit in third quarter was €1.3 million. The net loss
from operating activities in the third quarter of €4.2 million was
more than compensated by the (non-cash) gain in financial income
and expenses of €5.2 million during the third quarter. This (non-
cash) gain stems from a correction of €2.4 million in the
accounting of the fair value of warrants at 30 June 2014 and the decrease of the fair value
of the same warrants of €2.8 million in 3Q 2014. The operating
costs of €4.7 million in 3Q included the (non-cash) costs for the
share-based compensation of €1.3 million and costs for the start of
a Phase II clinical study of Ruconest® as prophylaxis for HAE of
€0.3 million.
OPERATIONAL HIGHLIGHTS
- US partner Salix Pharmaceuticals Inc. is preparing to launch
Ruconest® during 4Q 2014 having received approval from the FDA for
Ruconest® on 16 July 2014.
- A US$20 million milestone payment
from Salix will become payable within 30 days after the first
commercial sale of Ruconest® in the US or within 90 days since FDA
approval.
- New product leads for enzyme replacement therapy products in
Pompe's, Fabry's and Gaucher's diseases, as well as Factor
VIII and Factor IX for Haemophilia A and B were acquired through
the acquisition of certain assets of TRM SASU for €0.5 million in
cash.
- A Phase II clinical study of Ruconest® for prophylaxis of
Hereditary Angioedema was announced. Salix and Pharming will
equally share the costs of the study. On FDA approval for
prophylaxis of HAE an undisclosed milestone will become payable by
Salix to Pharming.
POST-PERIOD HIGHLIGHT
- Pharming and Swedish Orphan Biovitrum amended and extended the
Ruconest® Distribution Agreement. Pharming is in the process of
initiating directly commercialization of Ruconest® in Austria, Germany and the Netherlands. Sales through such direct
commercialization are anticipated to increase the yield of EU
sales.
Sijmen de Vries, Chief Executive Officer of Pharming, commented:
"During this first nine months of 2014 we prepared for US market
entry by investing in building inventories of Ruconest®. At
the same time, we strengthen the balance sheet with a "sub-10%"
private placement to institutional investors that yielded €14.7
million, which ensured that we were able to co- invest to develop
our main asset Ruconest® for additional indications,
such as the start of the Phase II clinical study in prophylaxis of
HAE. In addition, we announced our involvement in direct
commercialization activities in Austria, Germany and Netherlands.
We have executed on the next step of our strategic plan to
leverage our unique production platform through the acquisition of
product leads for additional enzyme replacement therapies in orphan
diseases such as Pompe, Fabry and Gaucher's disease and additional
leads to Factor VIII for Haemophilia A, to further support the
collaboration with Sinopharm's SIPI. Following the FDA approval of
Ruconest® in the USA, we are
looking forward to the launch of Ruconest® during Q4 and the
receipt of the US$20 million
milestone from Salix. In addition we will receive 30 % of US net
sales, up to $100 million annual
sales. For annual US net sales in excess of US$100 million this will stepwise increase up to
40 % of net sales. These proceeds, together with the start of
direct commercialization of Ruconest® in Austria, Germany and Netherlands, should begin to drive profitable
sales revenues from 2015 onwards and should help us meet our aim of
future financial sustainability."
FINANCIAL RESULTS
In the first nine months of 2014, the Company generated revenue
from sales of Ruconest® of €2.2 million (9M 2013: €0.6 million).
The increase in revenue from sales reflects the underlying
increased demands for Ruconest® in the EU markets, compared to 9M
2013. Costs of revenues amounted to €2.6 million (2013: €0.4)
including impairments of inventories amounting to €0.5 million.
Licensing fees decreased to €1.6 million (9M 2013: €5.4 million) as
a result of last year's receipt of a US$5
million payment by our US partner Santarus (now Salix
Pharmaceuticals: NASDAQ: SLXP "Salix").
Loss from operating activities increased to €9.7 million (9M
2013 €3.7 million), predominantly as a result of the receipt of the
one- off milestone payment of US$5
million in 2013, the increase of operating costs and a €0.5
million impairment on inventory, reflecting the current low yield
on EU sales.
Financial income and expenses increased to €9.2 million (9M
2013: €7.4 million), as a result of the (non-cash) increase of the
fair value of our outstanding warrants, reflecting the increase of
our share price in 9M 2014; while the 9M 2013 costs were related to
the January 2013 €16.35 million
convertible bond.
As a result of the above items, the net loss for the first nine
months of 2014 increased to €18.9 million from €11.1 million in the
same period of 2013.
Cash outflows from operations increased by €6.6 million to €13.7
million in 3Q 2014 (9M 2013: €7.1 million), mainly as a result of
the increase in manufacturing activities for Ruconest®, ahead of
the anticipated US launch in 4Q 2014.
FINANCIAL POSITION
Total cash and cash equivalents (including restricted cash)
increased to €23.8 million at 30 September
2014 from €19.2 million at year end 2013. The increase is a
result of net cash outflows from operations of €13.7 million and
€0.5 million used in investing activities, with net cash inflows
from financing activities amounting to €19.4 million and net cash
outflows from financing activities amounting to €0.6 million.
Financing cash inflows mainly result from the proceeds of the
private equity placement of €14.7 million in April 2014 and the exercise of (2012 and 2013)
warrants during 9M 2014, which yielded €4.7 million in cash.
EQUITY POSITION
The equity position increased by €10.9 million versus year-end
2013 (€5.0 million) to €15.9 million (9M 2013: €1.6 million
negative).
Pharming continues to monitor the development of its equity
standing under International Financial Reporting Standards (IFRS).
Notably, the Company reports that the negative equity position at
the end of 2011 was mainly caused by the inability to recognize the
€19.7 million upfront payments and milestones received from Sobi
and Santarus as equity (at 30 September
2014 the deferred license fees income amounted to €12.8
million).
The number of outstanding shares as of 30
October 2014 is 407,686,599 and the fully diluted number of
shares is 475.9 million
FINANCIAL GUIDANCE 2014
As result of the continuing regulatory review process in
Turkey, the prevailing unrest in
Israel and the announcement of
direct commercialization by Pharming in Austria, Germany and Netherlands, revenues from Ruconest® sales for
2014 (not including US sales) are now expected to increase from
€1.0 million in 2013 to €2.8 million, instead of the previously
expected €3.0 million.
No additional financial guidance is provided.
About Pharming Group NV
Pharming Group NV is developing innovative products for the
treatment of unmet medical needs. Ruconest® (conestat alfa) is a
recombinant human C1 esterase inhibitor approved for the treatment
of angioedema attacks in patients with HAE in the USA, Israel,
all 27 EU countries plus Norway,
Iceland and Liechtenstein. Ruconest® is commercialized by
Pharming in Austria, Germany and Netherlands. 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 partnered with Salix Pharmaceuticals Inc. (NASDAQ:
SLXP) in North America.
Ruconest® is also being investigated in a randomized Phase II
clinical trial for prophylaxis of HAE and evaluated for various
additional follow-on indications. Pharming has a unique GMP
compliant, validated platform for the production of recombinant
human proteins that has proven capable of producing industrial
volumes of high quality recombinant human protein in a more
economical way compared to current cell based technologies. Leads
for enzyme replacement therapy in Pompe's, Fabry's and Gaucher's
diseases are under early evaluation.The platform is partnered with
Shanghai Institute for Pharmaceutical Industry (SIPI), a Sinopharm
Company, for joint global development of new products. Pre-
clinical development and manufacturing will take place at SIPI and
are funded by SIPI. Pharming and SIPI initially plan to utilize
this platform for the development of rh-FVIII for the treatment of
Haemophilia-A. Additional information is available on the Pharming
website; http://www.pharming.com.
This press release contains forward looking statements that
involve known and unknown risks, uncertainties and other factors,
which may cause the actual results, performance or achievements of
the Company to be materially different from the results,
performance or achievements expressed or implied by these forward
looking statements.
PHARMING GROUP N.V.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED 30 SEPTEMBER
2014
Consolidated Statement of Financial Position
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Condensed Consolidated Interim Financial
Statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 September 2014 (unaudited
- amounts in €'000)
30 September 31 December
2014 2013
Intangible assets 321 405
Property, plant and equipment 5 5,776 6,228
Restricted cash 8 176 176
Non-current assets 6,273 6,809
Inventories 6 9,191 4,763
Trade and other receivables 7 1,667 860
Restricted cash 8 - 2,008
Cash and cash equivalents 8 23,632 16,968
Current assets 34,490 24,599
Total assets 40,763 31,408
Share capital 4,077 3,346
Share premium 282,261 254,901
Other reserves 16.525 14,874
Accumulated deficit (286,982) (268,111)
Total equity 9 15,881 5,010
Deferred license fees income 10,572 12,222
Finance lease liabilities 1,076 1,207
Other liabilities 22 44
Non-current liabilities 11,670 13,473
Deferred license fees income 2,200 2,200
Derivative financial liabilities 10 4,682 4,147
Trade and other payables 11 5,868 5,812
Finance lease liabilities 462 766
Current liabilities 13,212 12,925
Total equity and liabilities 40,763 31,408
Notes on pages 11-15 are an integral part of these condensed
consolidated interim financial statements.
CONSOLIDATED STATEMENT OF INCOME
For the nine months ended 30 September
2014 (unaudited - amounts in €'000, except per share
data)
30 September 30 September
Note 2014 2013
Continuing operations:
License fees 1,650 5,353
Product sales 2,193 614
Revenues 3,843 5,967
Costs of product sales (2,189) (419)
Inventory impairments (474) -
Gross profit 1,180 5,548
Income from grants 92 79
Other income 92 79
Research and development (9,165) (7,554)
General and administrative (1,770) (1,754)
Costs (10,935) (9,308)
Result from operating activities 12 (9,663) (3,681)
Financial income 13 144 588
Financial expenses 14 (9,352) (8,002)
Financial income and expenses (9,208) (7,414)
Net result from continuing operations (18,871) (11,095)
Attributable to:
Net result from continuing operations (18,871) (11,095)
Owners of the parent (18,871) (11,095)
Share information:
Basic and diluted net loss per share
(EUR) (0.05) (0.06)
Weighted average shares outstanding 388,245,868 175,368,600
Notes on pages 11-15 are an integral part of these condensed
consolidated interim financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the nine months ended 30 September
2014 (unaudited - amounts in €'000)
30 September 30 September
2014 2013
Net result (18,871) (11,095)
Currency translation differences - -
Items that will be subsequently reclassified
to profit or loss - -
Other comprehensive income, net of tax - -
Total comprehensive income (18,871) (11,095)
Attributable to:
Equity owners of the parent (18,871) (11,095)
Notes on pages11-15 are an integral part of these condensed
consolidated interim financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the nine months ended 30 September
2014 (unaudited - amounts in €'000)
30 September 30 September
Note 2014 2013
Receipts from license partners 1,651 4,804
Receipts of Value Added Tax 712 572
Interest received 136 6
Other receipts 283 848
Payments of third party fees and expenses,
including Value Added Tax (5,471) (8,708)
Payments of third party manufacturing expenses (7,684) (347)
Net compensation paid to board members and
employees (1,707) (1,460)
Payments of pension premiums, payroll taxes and
social securities, net of grants settled (1,604) (1,585)
Restructuring payments - (1,245)
Net cash flows used in operating activities 8 (13,684) (7,115)
Proceeds from sale of assets - 262
Purchase of property, plant and equipment (500) (21)
Net cash flows provided by/(used in) investing
activities 8 (500) 241
Proceeds of convertible bonds issued - 16,023
Proceeds of equity and warrants issued 19,375 -
Payments of transaction fees and expenses (697) (1,368)
Payments of finance lease liabilities (139) (478)
Net cash flows from financing activities 8 18,539 14,177
Increase cash 4,355 7,303
Exchange rate effects on cash 301 (123)
Cash at 1 January 8 19,152 6,314
Cash at 30 September 23,808 13,494
Cash composition:
Restricted cash (non-current) 176 176
Restricted cash (current) - 618
Cash and cash equivalents 23,632 12,700
Cash at 30 September 23,808 13,494
Notes on pages 11-15 are an integral part of these condensed
consolidated interim financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the nine months ended 30 September
2014 (unaudited - amounts in €'000)
Accu- Share-
Number Share Share Other mulated holders' Total
Note of shares capital premium reserves deficit equity equity
Balance at 1
January 2013 100,918,910 10,092 231,866 14,144 (263,754) (7,652) (7,652)
Loss for the
period - - - - (11,095) (11,095) (11,095)
Other
comprehensive
income for
the period - - - - - - -
Total
comprehensive
income for
the period - - - - (11,095) (11,095) (11,095)
Share-based
compensation - - - 224 - 224 224
Bonuses
settled in
shares 9 1,281,777 12 176 - - 188 188
Repayments of
bonds 2013 9 127,369,529 2,896 13,824 - - 16,720 16,720
Warrants
exercised 300,000 3 19 - - 22 22
Adjustment
nominal value
per share - (10,704) - - 10,704 - -
Total
transactions
with owners,
recognized
directly in
equity 128,951,306 (7,793) 14,019 224 10,704 17,154 17,154
Balance at 30
September
2013 229,870,216 2,299 245,885 14,368 (264,145) (1,593) (1,593)
Balance at 1
January 2014 334,655,224 3,346 254,901 14,874 (268,111) 5,010 5,010
Loss for the
period - - - - (18,871) (18,871) (18,871)
Other
comprehensive
income for
the period - - - - - - -
Total
comprehensive
income for
the period - - - - (18,871) (18,871) (18,871)
Share-based
compensation - - - 1,651 - 1,651 1,651
Bonuses
settled in
shares
963,066 10 440 - - 450 450
Shares issued
for cash 9 30,000,000 300 13,704 - - 14,004 14,004
Warrants
exercised/
issued 9 42,012,059 420 13,213 - - 13,633 13,633
Options
exercised 56,250 1 3 - - 4 4
Total
transactions
with owners,
recognized
directly in
equity 73,031,375 731 27,360 1,651 - 29,742 29,742
Balance at 30
September
2014 407,686,599 4,077 282,261 16,525 (286,982) 15,881 15,881
Notes on pages 11-15 are an integral part of these condensed
consolidated interim financial statements.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the nine months ended 30 September
2014
1. Company information
Pharming Group N.V. ('Pharming' or 'the Company') is a limited
liability public company which is listed on NYSE Euronext
Amsterdam, with its headquarters and registered office located
at:
Darwinweg 24
2333 CR Leiden
The Netherlands
Pharming focuses on the development, production and
commercialization of human therapeutic proteins to be used as
highly innovative therapies. The Company's products are aimed at
treatments for genetic disorders and surgical and traumatic
bleeding. Pharming's technologies include novel transgenic
platforms for the production of biopharmaceuticals, as well as
technology and processes for the purification and formulation of
these biopharmaceuticals.
2. Basis of presentation
These condensed consolidated interim financial statements do not
include all of the information required for full annual financial
statements and should be read in conjunction with Pharming's Annual
Report 2013. In addition, the notes to these condensed consolidated
interim financial statements are presented in a condensed
format.
These condensed consolidated interim financial statements have
not been reviewed or audited. The Board of Management has approved
these condensed consolidated interim financial statements on
29 October 2014.
Going Concern Assessment
The Board of Management of Pharming has, upon preparing and
finalizing these financial statements, assessed the Company's
ability to fund its operations for a period of at least one year
after the date of signing these financial statements.
Based on the above assessment, the Company has concluded that
funding of its operations for a period of well in excess of one
year after the date of the signing of these financial statements is
realistic and achievable. In arriving at this conclusion, the
following main items and assumptions have been taken into
account:
- cash and cash equivalents of approximately €22.9 million as per
the date of these financial statements (30
October 2014);
- the projected, however undisclosed sales revenues for the
period involved, related to the markets in which the Company
already has market approval;
- the Company's operating cash outflows, its investments in
(in)tangible assets for one year after the end of the financial
statements; The cash outflow is expected to increase as a result of
the increase in manufacturing expenses;
- the anticipated receipt of US$20.0
million in cash from our US partner Salix following the
recent market approval of Ruconest® by the U.S. FDA
Pharming has not taken into account other potential sources of
cash income, including, but not limited to the following:
- proceeds from the exercise of warrants or options outstanding
as per the date of these condensed consolidated financial interim
statements;
- capital raised by means of an additional capital markets
transaction, such as non-dilutive (debt) financing, issuance of
equity or a combination thereof.
- other receipts from existing or new license partners.
In addition, the Company may decide to cancel and/or defer
certain activities in order to limit cash outflows until sufficient
funding is available to resume them. Deferrals substantially relate
to the timing of manufacturing-related and/or planned future
clinical development activities for additional indications carried
out on the initiative of Pharming.
Notwithstanding the above, the Board of Management of the
Company emphasizes that the funding of the Company's operations
beyond one year after these financial statements is largely
affected by its ability to increase product sales and/or license
fee payments from both existing and new partnerships to generate
positive cash flows in the future.
With regards to its ability to generate operating cash flows
from product sales and/or license fee payments, the following
uncertainties (individually or combined) have been identified:
- the commercial success of Ruconest® in the US,
- the commercial success of Ruconest® in the EU.
Overall, based on the outcome of this assessment, these
financial statements have been prepared on a going concern basis.
Notwithstanding their belief and confidence that Pharming will be
able to continue as a going concern, the Board of Management
emphasizes that the actual cash flows for various reasons may
ultimately (significantly) deviate from their projections.
Therefore, in a negative scenario (actual cash inflows less than
projected and/or actual cash outflows higher than projected) the
going concern of the Company could be at risk in the period beyond
12 months as per the date of these financial statements.
3. Summary of significant accounting
policies
The applied accounting principles are consistent with those as
described in Pharming's Annual Report 2013.
Significant accounting estimates and judgments
The preparation of financial statements requires judgments and
estimates that affect the reported amounts of assets and
liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities at the date of the condensed
consolidated interim financial statements. The resulting accounting
estimates will, by definition, seldom equal the actual results. The
estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amount of assets and
liabilities within the next financial year are addressed below.
Property, plant and equipment
At the end of the first nine months of 2014, Pharming has
property, plant and equipment with a net carrying value of €5.8
million. These assets are dedicated to the production of Ruconest®
inventories (€4.6 million) and other corporate purposes (€1.2
million). It is assumed these asset groups will continue to be used
in ongoing production, research and development or general and
administrative activities over its anticipated lifetime.
Inventories
At the end of the first nine months of 2014, the Company has
capitalized Ruconest® product and milk with an aggregate net
carrying value of €9.2 million.
The Company has planned for additional inventory investments
after the end of the reporting period. These inventories are
available for use in commercial, preclinical and clinical
activities.
Estimates have been made with respect to the ultimate use or
sale of the product, taking into account current and expected
preclinical and clinical programs for both the HAE project and
other indications of Ruconest® as well as sales projections. In
doing so, best estimates have been made with respect to the timing
of such events in view of both the existing and expected lifetimes
of the product involved.
Due to the early stage commercialization cycle of Ruconest® the
actual cash proceeds from these product sales are currently
difficult to predict in terms of volumes, timing and reimbursement
amounts. In addition, further inventory investments and execution
of pre-clinical and clinical activities are subject to availability
of sufficient financial resources.
Derivative financial liabilities
At 30 September 2014, the Company
has presented derivative financial liabilities with a carrying
value of €4.7 million. These liabilities primarily represent the
fair values of warrants issued. These fair values are based on
models using assumptions with respect to, amongst others, the
exercise of the warrants on or before maturity dates as well as
(historical) volatility. Actual share price developments may
trigger exercise of these warrants on a different moment than
anticipated in the model and also cause transfer of assets to
warrant holders under conditions that are (much) more or (much)
less favorable than anticipated at 30
September 2014. As a result, the difference between the
value of assets transferred to warrant right holders upon exercise
and the carrying value at 30 September
2014 as charged to the statement of income may be
material.
Share price developments may also result in the warrants
expiring unexercised while the fair value of warrants unexercised
may fluctuate (significantly) until expiration. Fair value changes
of warrant rights unexercised between 30
September 2014 and subsequent reporting dates are charged to
the statement of income.
4. Cyclicality
In view of the Company's line of business, revenues and cash
income from operating activities are subject to the timing of
entering into commercial activities as well as the underlying
mechanisms of the deal structure (e.g. achievement of milestones).
Expenses incurred for research and development activities as well
as their associated cash flows highly depend on the phase of
research or development. Such items may vary significantly from
period to period (i.e. from quarter to quarter) due to the timing
and extent of commercial activities as well as research and
development activities and are partially beyond control of the
Company.
5. Property, plant and equipment
The carrying value of Pharming's property, plant decreased from
€6.2 million at year end 2013 to €5.8 million at 30 September 2014 due to depreciation of these
assets.
6. Inventories
Pharming's inventories increased from €4.8 million at
31 December 2013 to €9.2 million at
30 September 2014.
7. Trade and other receivables
The increase of trade and other receivables to €1.7 million at
30 September 2014 from €0.9 million
at 31 December 2013 mainly results
from an increase in trade receivables of €0.3 million and other
receivables of €0.5 million related to the investing
activities.
8. Restricted cash, cash and cash equivalents,
cash flows
The overall net cash position for the first nine months ended
30 September 2014 and 30 September 2013 is as follows:
30 September 30 September
Amounts in EUR'000 2014 2013
Non-current restricted cash 176 176
Current restricted cash - 618
Cash and cash equivalents 23,632 12,700
Balance at 30 September 23,808 13,494
Balance at 1 January 19,152 6,314
Increase for the period 4,656 7,180
Restricted cash represent the value of banker's guarantees
issued with respect to (potential) commitments towards third
parties and are primarily related to the rent of the Company's
offices.
The main cash flow items for the first nine months of 2014 and
2013 can be summarized as follows:
30 September 30 September
Amounts in EUR'000 2014 2013
Net cash flows used in operating activities (13,684) (7,115)
Net cash flows provided by/(used in) investing
activities (500) 241
Net cash flows from financing activities 18,539 14,177
Exchange rate effects on cash 301 (123)
increase for the period 4,656 7,180
Cash flows used in operating activities increased by €6.6
million, which is entirely related to the increase of third party
manufacturing expenses, regarding the build-up of Ruconest®
inventories.
In the third quarter of 2014 investing activities took place of
€0.5 million for the purchase of assets in France. Cash flows provided by investing
activities of €0.2 million in the first nine months of 2013
concerns the sale of an intangible asset.
In the first nine months of 2014 the €18.5 million cash flows
from financing activities following receipt of €14.0 million in
relation of the private equity placement, receipt of €4.6 million
in relation to the exercise of warrants and payments of finance
lease liabilities of €0.1 million. Cash flows from financing
activities of €14.2 million in the first nine months of 2013
largely stems from the €16.0 million received in relation to the
issue of the 2013 convertible bonds, while financing payments
totaling €1.8 million related to transaction fees and expenses and
payment of finance leasing terms.
9. Equity
Main developments total equity in the first nine months
of 2014
During the first nine months of 2014 Pharming received an
additional inflow of cash of €4.6 million from the exercise of
42,012,059 warrants.
On 21 April 2014, Pharming entered
into a private equity placement of €14,7 million for which it
issued 30 million shares against €0.49 representing the average
closing price of the shares over the last five trading days
preceding the placement. In addition, the Company issued 21,000,000
warrants with a lifetime of 2 years and an exercise price of €0.57
to the investors. The transaction costs for this placement amounted
to €696,500.
The Company also transferred an aggregate number of 963,066
shares to members of the Board of Management and employees in lieu
of bonus rights for the year 2013 and FDA approval.
Main developments total equity in the first nine
months of 2013
On 28 February 2013, the EGM
approved a 10:1 reverse split of the Company's stock and a
subsequent reduction of the nominal share value from €0.10 to
€0.01. This lead to a reduction of share capital of €10.7 million
which was offset against accumulated deficit. Therefore, the
overall effect of this on shareholders' equity is nil.
All numbers of shares mentioned in these interim financial
statements have been adjusted retro-actively for the reverse split
where applicable.
Under the 2013 convertible loan agreement which is described in
more detail in Note 11, Pharming issued a total number of
127,369,529 shares to 2013 bond holders.
The Company also transferred an aggregate number of 1,281,777
shares to members of the Board of Management and employees in lieu
of bonus rights for the year 2012.
10. Derivative financial liabilities
The changes in derivative financial liabilities in the first
nine months of 2014 related to 21,000,000 warrants with an exercise
price of €0.57, issued in relation to the April 2014 private equity placement and
adjustments of the fair value of outstanding warrants and the
exercise of warrants during the first nine months. All outstanding
warrants were revalued for accounting purposes at 30 September 2014.
Derivative financial liabilities recognized in the first nine
months of 2013 related to 16,349,999 warrants issued in relation to
the 2013 Bonds and conversion rights on the 2013 Bonds with the
initial fair value of these items upon recognition amounting to
€1,161,000 and €223,000 or €1,384,000 in total. In addition all
outstanding warrants were revalued for accounting purposes at
30 September 2014.
Movement of derivative financial liabilities for the first nine
months of 2014 and 2013 can be summarized as follows:
Amounts in EUR'000 2014 2013
Carrying value at 1 January 4,147 1,215
Initial recognition upon issue 5,544 1,384
Fair value losses (gains) derivatives 9,521 (671)
Exercise of warrants (14,530) -
Carrying value at 30 September 4,682 1,928
Fair value losses/ (gains) have been presented respectively
within financial income and expenses.
11. Trade and other payables
Trade and other payables balances increased from €5.8 million at
year end 2013 to €5.9 million at 30
September 2014 mainly as a result of more trade payables in
relation to manufacturing expenses associated with the production
of (Ruconest®) inventories and less other payables.
12. Result from operating activities
In the first nine months of 2014, the Company reported a loss
from operating activities of €9.7 million compared to €3.7 million
in the same period of 2013. The €6.0 million increase is mainly a
result of receipt of the one- off milestone payment of US$5 million in 2013, the increase of the
operating costs and a €0.5 million impairment on inventories,
reflecting the current low yield on EU sales.
As explained in Note 4, Pharming operates in an industry in
which revenues and expense are to some extent varying based on the
timing of events such as entering into commercial agreements,
achievement of milestones or the phase of research or development.
These activities are partially beyond control of the Company.
13. Financial income
Financial income in the first nine months of 2014 and 2013
amounted to €0.1 million and €0.6 million, respectively, which in
2013 exclusively related to the decreases in the fair value of
derivative financial liabilities and in 2014 related to interest on
cash.
14. Financial expenses
In 2014 financial expenses increased to €9.4 million (9M 2013:
€8.0 million), as a result of the (non-cash) increase of the fair
value of our outstanding warrants, reflecting the increase of our
share price in 9M 2014.
Financial expenses of €8.0 million in the first nine months of
2013 were mainly related the 2013 Bonds and to other items such as
foreign currency results and interest on finance leases.
15. Operating segments
The Company is active in one operating segment which is the
recombinant proteins business segment.
16. Commitments and contingencies
In the first nine months of 2014, there were no material changes
to the commitments and contingent liabilities from those disclosed
in Note 30 of the 2013 Annual Report.
17. Events after the end of the reporting
period
The total number of outstanding shares at 30 October 2014 amounts to 407,686,599.
The authorized number of shares of the Company is 550 million
with fully diluted shares as per 30 October
2014 summarized as follows (in millions):
Shares 407.7
Warrants 26.4
Options 37.5
Long Term Incentive Plan 4.3
Total 475.9
PRN NLD
