jonas schreef:
Kempenbericht was: "Downgrade to sell
We are cautious about the medium to long term outlook for Pharming,
despite the recent successful raising of cash and the forthcoming
approval of its lead product Rhucin. In our view the majority of Pharming’s
valuation is based on Rhucin, and expectations are too high, making the
share price binary. The lack of a sales force or distribution partner and the
gap in the pipeline are additional risk factors. Given our TP of €2.5 and the
recent share performance we downgrade from HOLD to SELL.
Fiscal Year 2006 2007E 2008E 2009E
Revenues (€ m) 0.1 0.8 5.8 43.3
EBITDA (€ m) -16.3 -18.8 -18.3 -0.4
EBITA (Adj.EBIT) (€ m) -17.7 -20.2 -18.7 -3.0
Adjusted Net profit (€ m) -18.2 -22.4 -22.3 -7.1
Adjusted EPS (€) -0.21 -0.25 -0.24 -0.08
EPS Change nm nm nm nm
CFPS (€) -0.20 -0.23 -0.24 -0.05
DPS (€) 0.00 0.00 0.00 0.00
PE nm nm nm nm
EV/EBITDA -19.2 -17.6 -19.3 -989.1
FCF Yield -15.5% -7.5% -7.1% -3.2%
Dividend Yield 0.0% 0.0% 0.0% 0.0%
Source: Company Data, Kempen & Co Estimates
?? Pharming raised €70m in cash Last Friday Pharming announced the
successful placement of convertible notes, raising €70m in cash for the
company. The money was needed because the company’s cash position
was only sufficient to support current operations for less than one year. In
addition, Pharming announced that it would use approximately €20m of the
proceeds to restructure its financial obligations to the Paul Royalty Fund.
We believe this is positive, because in our view the financing round in 2006
with the Paul Royalty Fund was a larger financial burden than initially
anticipated. The remaining cash will enable Pharming to complete its clinical
and regulatory efforts and prepare the lead product Rhucin for commercial
launch.
?? Rhucin is the major determinator of Pharming’s value. In our view the
value of Pharming depends mostly on Rhucin (77% in our valuation). As a
result, any new developments related to Rhucin have an impact on
Pharming’s value. We believe that during recent months this was also
reflected in the share price performance. Pharming’s lead product is
currently at the final stage of approval by the regulatory authorities in
Europe (EMEA). Pharming just announced that they expect an EMEA
decision at the earliest in December 2007 and a possible marketing
approval in 2008. Furthermore, the company expects to finalize its clinical
trials in the US in Q4 07 and subsequently start the registration procedure in
2008. Based on this information we have postponed a potential market
launch date in our model. Last but not least, the absence of a sales force or
a partnership on distribution of their novel treatment will limit the ramp up of
substantial product revenues. This has an impact on our valuation and
lowers our target price to €2.50 (from €2.70).
Competitive landscape for Rhucin constantly changing Pharming has a number of
competitors that are working on related products to treat HAE. Key competitors are
Jerini, Dyax and Lev Pharmaceuticals. In Europe Pharming filed first with the authorities
and recently Jerini has filed as well. Lev Pharmaceuticals and Jerini recently filed with
the FDA in the US. Both Dyax and Jerini have lost their marketing partner for their HAE
product this year (Genzyme and Abbott/Kos respectively). So, none of the HAE therapy
developing companies has a sales force or distribution partner at the moment. We
believe that the competition for a (distribution) partner may have a negative impact on
the proceeds that may be obtained from a partnership deal for Pharming. More
importantly, the possible competition between products once marketed may affect future
sales potential and margins for Pharming as well.
Table 1. Valuation of Pharming’s programmes (SOTP)
Programme rNPV Value per share
C1 HAE EU (Rhucin) 88 1.0
C1 HAE US (Rhucin) 33 0.4
C1 Delayed Graft Function 31 0.3
C1 Coronary Leakage Syndrome 21 0.2
Lactoferrin (Nutritional) 52 0.6
Fibrinogen (Wound) 13 0.1
Operating value 239 2.6
Cash (14) (0.2)
Value of ordinary shares 224 2.5
Source: Kempen & Co estimates
?? Investment case Pharming is close to market with its lead product Rhucin for the
treatment of HAE. It is the first company to file with the regulatory authorities (in 2006,
EMEA approval due YE 07). Most important near-term positive triggers for the share are
the potential approval of Rhucin by the EMEA and the subsequent market launch.
However, we believe that market expectations are too high for the lead product Rhucin
and we estimate that the fundamental value of Pharming is €2.50 per share. Note that if
Pharming is not able to bring Rhucin to the market for whatever reason, our model
would point to a fair value of €0.50. Based on these concerns, our TP of €2.50, and the
recent share performance we downgrade from HOLD to SELL.
Dat is niet mis. Ik kom erop terug en ook op die converteerbare lening. Nu even geen tijd. Lijkt mij allemaal niet zo koddig.
Groet, Jonas