FINANCIAL HIGHLIGHTS
Revenues
Revenues increased in the first nine months of 2015 to €8.5 million from €3.8 million in 2014, an increase of 123%, as a result of considerably increased product sales of €6.8 million compared to €2.2 million in 2014. RUCONEST® sales in the U.S. amounted to €5.1 million and sales in the EU amounted to €1.6 million.
Other license fee income amounted to €1.7 million, which was in line with 2014. This license fee income reflects the release of accrued deferred license fees following receipt of €21.0 million upfront and milestone payments in 2010 and 2013 from SOBI, Salix and SIPI.
Cost of product sales in the first nine months of 2015 amounted to €3.9 million (2015: €2.2 million). In the first nine months of the year, the Company incurred a net release of inventory impairments (€0.15 million), related to reallocation of inventories to the different markets with different prices, based on sales forecasts by management, commercial partners and clinical programs. Actual sales can differ from these forecasts.
Gross profit
Gross profit increased by €3.6 million to €4.8 million in the first nine months of 2015, an increase of 300%, mainly as a result of an improving "product mix" from sales in the US by our partner Valeant, direct commercialization by Pharming in Austria, Germany and the Netherlands and a gain due to a net release of impairments of inventories.
Operating costs
Operating costs increased to €13.9 million in 2015 from €10.9 million in 2014, an increase of 28%. Research and Development (R&D) costs increased by €1.2 million to €10.3 million in 2015, mainly due to costs for the new R&D site in France, increased R&D activities in the Netherlands and increased costs for clinical studies. General and Administrative costs increased to €2.7 million from €1.8 million in 2014, mainly as a result of increased (non-cash) share-based compensation and increased consultancy, training and recruitment costs. Marketing and Sales costs amounted to €0.9 million. These were costs for direct commercialization activities by Pharming in Germany, Austria, the Netherlands and other countries in the world (outside US and EU). In 2014, no direct commercialization of RUCONEST® took place. The inventories of RUCONEST® increased to €16.7 million from €13.4 million as per 31 December 2014 in preparation of expected sales and ahead of a planned temporary closing of the third party fill and finish production facilities in the last quarter of 2015, as a new operator takes over the site.
Operating result
As a result of the increase in gross profit and despite the increase of operating costs due to increased investment in new programs, the operating loss of €9.1 million in 2015 was improved relative to last year's loss (€9.7 million). This represents a 6% improvement.
Financial income and expenses
The 2015 net gain on financial income and expenses was €3.2 million, compared to a €9.2 million net loss on financial income and expenses in the first nine months of 2014. The financial income and expenses reflected the (non-cash) revaluation of warrants, exchange rate effects on foreign currencies and interest payments on the new debt financing.
Net result
As a result of the above items, the net loss decreased by €13.0 million to €5.9 million in the first nine months of 2015 (first nine months 2014: €18.9 million), an improvement of 69%. The net loss per share decreased by 70% to €0.014 (2014: €0.046).
FINANCIAL POSITION
The cash position increased during the first nine months of 2015 as a result of the increased revenues and debt financing compensating for cash outflow from operating activities. Total cash and cash equivalents (including restricted cash) increased by €0.7 million from €34.4 million at the end of 2014 to €35.1 million at the end of September 2015. The increase follows from net cash outflows from operations of €13.0 million and investing activities of €0.8 million with net cash inflows from financing activities amounting to €14.2 million, as a result of the new debt financing and positive exchange rate effects of €0.3 million.
EQUITY POSITION
The Company's equity position amounted to €25.6 million at the end of September 2015 (31 December 2014: €29.8 million). In addition, it should be noted that the Company has a significant amount of deferred license fee income (September 2015: €10.6 million) regarding non-refundable license fees received in 2010 and 2013, which will be recognised in the statement of income over the term of the license agreements involved.
The number of outstanding shares as of 30 September 2015 was 408.3 million and the fully-diluted number of shares was 480.1 million.
OUTLOOK
For the remainder of 2015, the Company expects:
Increasing sales of RUCONEST® from US partner Valeant, EU partner SOBI and Israel partner Megapharm, the start of RUCONEST® sales through the HAEi Global Access Program and from the direct commercialisation of RUCONEST® in Austria, Germany and the Netherlands.
Continued investments in building inventories of sufficient quantities of RUCONEST® to meet demand.
Continuing investment in the Phase II clinical trial of RUCONEST® for Prophylaxis of HAE; these costs are shared 50/50 with US partner Valeant.
Continuing investments in development of new pipeline projects.
No financial guidance for 2015 is provided.
The Board of Management
Sijmen de Vries, CEO