CHIEF EXECUTIVE OFFICER’S STATEMENT
2017 was the year in which Pharming turned profitable from revenues for the first time in its history. This means that we have now established a financially-sustainable basis for our business. HAE patients will be able, therefore, to rely on having a plasma-free (recombinant) C1-inhibitor protein replacement therapy available to treat their HAE attacks. The availability of a reliable and fast scalable plasma-free (recombinant) therapy is turning out to be an important aspect, as twice over the last eighteen months a plasma-derived C1-inhibitor product has had serious issues with supplies as result of manufacturing problems.
This sustainable base allows us to now broaden our scope and focus on the near-time clinical development of more convenient ways for HAE patients to use RUCONEST®, such as intramuscular and sub-cutaneous injections, but also on research into the application of needle-free and pain-free technologies with RUCONEST®.
The further development of RUCONEST® to extend the HAE franchise also accelerated: The filing with the FDA of our sBLA for propyhylaxis of HAE in November and acceptance for review by the FDA of the dossier, in January of this year and the completion of our paediatric trial to treat HAE attacks in children from the age of 2 years of age and upwards were significant step forward to underpin the proven efficacy and safety of RUCONEST® further.
During the year we have also taken the next steps in the initiation of clinical development for additional indications for RUCONEST® outside of HAE, including support for as-yet undisclosed Investigator Sponsored Studies and results of one of these studies may already become available later this year.
Over the year, we have continued to make progress on bringing forward our pre- clinical pipeline of products developed using our proprietary technology platform. The first of these new products; human recombinant a-glucosidase for the treatment of Pompe disease, is now undergoing upscaling of manufacturing to produce supplies for the clinical testing and is expected to complete the final steps to IND filing stage in 2018, and we will be providing more clarity on these timelines during the course of 2018.
Our business success in 2017 was driven by the game-changing reacquisition of commercialisation rights for RUCONEST® in North America from certain subsidiaries of Valeant Pharmaceuticals International, Inc. and strong growth in some of the EU markets, growing product sales from €13.7 million in 2016 to €88.7 million in 2017, an increase of 547%.
Throughout the year, the transition of the sales force that we were building for RUCONEST® was our focus. Immediately after the acquisition of the commercial rights in North America, we initiated our plans to increase awareness and sales of RUCONEST® in the US market. We have now hired a complete experienced HAE/rare disease sales force, an excellent medical science liaison team, and a very capable management team expert in marketing, sales, commercial activity, market access and patient support. Competition has increased and will continue to increase and change in the HAE market, but these newer products are not currently suitable for (and are not expected to be approved for) acute treatment of HAE at this time. RUCONEST® therefore remains the only product that could, in due time, become approved for both prophylaxis and treatment of acute attacks of HAE.
As result of these EU and US transitions, we now operate with an appropriate commercial presence in both Western Europe and the USA and we delivered on our commitment to deliver an operationally profitable company within 2017, and I am delighted to say that not only did we achieve operating profits in every quarter but that the total operating profit for the year was €21.9 million, which represents an operating margin of more than 24%, despite very considerable investments in marketing and sales activities and investments. The refinancing of the complex financing structure that was needed to re-
acquire the North American commercialisation rights in December 2016 by obtaining a single US$100 million debt facility from Orbimed Advisors in May of this year meant that we were also able to prevent very significant dilution for our shareholders.
These improvements in commercialisation performance, the achievement of regulatory milestones and the financial restructuring contributed to Pharming achieving significant value for its shareholders in 2017, with our share price appreciating by over 400% during the year. This rapid growth of our share price in turn led to the exercising of almost all of the outstanding warrants during 2017 and the remainder in early 2018, which now means that for most of 2018 we will not have the very significant non-cash quarterly adjustments and can deliver on our commitment to become a net earnings-generating company during 2018.
The support, expertise and hard work of all our employees makes Pharming what it is. I would like to take this opportunity once more to thank all Pharming employees as well as all of our investors, partners and debt providers for their support and commitment throughout 2017, which enabled us especially to execute on the commercial development of the Company to create the platform for very significant growth.
I look forward with confidence to continuing the upward story of Pharming in 2018, with sales increasing further, a new exciting pipeline and new opportunities for enhanced shareholder value.
Leiden, 28 March 2018
Sijmen de Vries