Pharming Group N.V. Q3 FY2025 Earnings Call

Good day, and thank you for standing by. Welcome to Pharming Group N.V. Third Quarter 2025 Results Conference Call and Webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Fabrice Chouraqui, Chief Executive Officer. Please go ahead.

Thank you, operator, and good morning and good afternoon, everyone. Welcome to Pharming's Q3 2025 Earnings Call. Joining me today are Steve Toor, our Chief Commercial Officer; Anurag Relan, our Chief Medical Officer; and Kenneth Lynard, our new Chief Financial Officer. During this call, we will be making forward-looking statements based on our current insights and plans. These may differ from future results. As noted in our press release earlier today, we had another very strong quarter. Total revenues increased by 30% in the third quarter of 2025 compared to the same quarter last year, and operating profit rose to $15.8 million, nearly four times last year's figure. Our operating cash flow was $32 million, bringing our cash position close to where it was at the end of 2024 before acquiring Abliva. Our impressive top-line growth was driven by the continued significant growth of our two commercial assets, RUCONEST and Joenja. RUCONEST's revenue grew by 29% year-on-year, supported by a rise in new prescribers and patient enrollments, even with the launch of a new oral on-demand therapy in July. This demonstrates RUCONEST's unique value for patients severely affected by HAE, which Steve will expand on shortly. Joenja's revenue in the third quarter increased by 35%, reflecting a 25% rise year-on-year in patients receiving treatment and our growing success in identifying new APDS patients. The drug continues to gain traction in the 12-year-plus APDS segment. Looking ahead, we expect to introduce new growth sources with the pediatric indication, the reclassification of U.S. patients, and our geographic expansion. The strong momentum of our two commercial assets allows us to upgrade our full-year 2025 revenue guidance to between $360 million and $375 million, up from the previous $335 million to $350 million, which Kenneth will detail later in the call. Additionally, the recent substantial reduction in G&A headcount aligns with our strategy to optimize capital allocation towards high-growth initiatives, enabling us to fully take advantage of our significant growth opportunities. Before we delve deeper into our commercial and financial results, I want to emphasize that our Q3 performance reflects a strong growth foundation. In just a few years, Pharming has evolved from a single asset company into a fast-growing biotech with two high-growth commercial products and a late-stage pipeline featuring two programs, each with over $1 billion sales potential. RUCONEST continues to achieve double-digit growth after ten years on the market. Its unique value for severe HAE patients and specialized manufacturing process position it as a reliable revenue source for funding our future growth. Joenja is just beginning its lifecycle with multiple growth catalysts. Recent data indicates significantly higher APDS prevalence, and expansion into larger PIDs and CVID could unlock a much larger market. KL1333 for primary mitochondrial disease represents another opportunity exceeding $1 billion, with a positive futility analysis in the current registrational study. This combination of sustainable revenues, first-in-disease innovation, and a late-stage pipeline places Pharming in a strong position for substantial value creation in both the near and long term. With this portfolio and pipeline as our foundation, we can leverage our robust rare disease capabilities to establish a leading global rare disease company and fulfill our vision. I will now turn the floor over to Steve, who will discuss our commercial progress over the quarter and provide more insights into the continued robust growth of RUCONEST and Joenja.

Thank you, Fabrice. Good morning, everybody. As Fabrice said, RUCONEST has delivered another very successful quarter with high double-digit growth of $82 million in revenue, which is up 29% on Q3 of last year. The strong growth is being driven by the continued increase in prescribers quarter-on-quarter. New prescribers are recognizing the value RUCONEST brings to patients suffering with moderate to severe HAE, and this underpins our consistent prescriber growth over the years. In fact, we've added an average of 22 new prescribers in the past six quarters, which leads directly to the high level of new patient enrollment and the vial volume increase over prior year, which is at 28% versus the first nine months of 2024. Pharming's sustained success, unabated by the recent launch of the oral product, reflects RUCONEST's unique profile and strong differentiation in the acute on-demand HAE market. RUCONEST remains an important treatment option for moderate to severe patients who experience more frequent attacks, which explains the continued strong momentum and our confidence in the product's long-term growth prospects. As a reminder, RUCONEST is a highly effective product serving all patient types, type 1, type 2, and normal C1, specifically those patients suffering from frequent moderate to severe debilitating HAE attacks. They've also typically failed other single pathway-specific targeted acute therapies such as Icatibant, which have not been effective for them, often leading to the need to redose to stop their HAE attack. As the only recombinant C1 protein replacement therapy, RUCONEST uniquely addresses the root cause of HAE, providing strong differentiation versus single pathway targeted therapies. This differentiation is why RUCONEST is a cornerstone treatment for HAE attacks. You can see in the photographs on this slide an actual RUCONEST patient, and this is exactly the type of patient I mean, with a more severe course of disease attacking frequently and having to redose on other therapies along with her recovery as she resolves the attack. HAE patients with the disease profile I've described need RUCONEST on hand, which through its IV mode of action delivers a bolus of C1 straight in the vein, which is critical for them. As a result, by using RUCONEST, patients get complete resolution in a single dose for 97% of their attacks. Half of those patients actually get complete attack resolution in 4.5 hours with the vast majority within 24. That efficacy is both critical and reassuring, and that is direct feedback from the patients we serve. Switching gears to Joenja. As with RUCONEST, we've delivered another strong third quarter. We achieved high double-digit year-over-year revenue growth of plus 35%, generating $15.1 million in revenue for the quarter. The number of U.S. patients on paid therapy is up 25% versus Q3 2024. And importantly, we've identified 13 additional APDS patients in Q3 alone, which shows our ability to keep building the patient funnel in this ultra-rare disease. We're finding patients faster than we did in 2024 with a total number of APDS patients in the U.S. now at 270. Importantly, the resulting significant increase in patients versus 2024 on patients consistently high adherence to therapy is driving this strong revenue growth. The launch of Joenja in the U.K. is also going well, and this is an important first step as we execute our focused geographic expansion plans. Let's now review the next significant inflection point, which is the pediatric launch in the U.S. for patients aged 4 to 11. The FDA has granted priority review of our application to expand the label and assigned a PDUFA date or an approval date of January 31, 2026. Our preparations for launch after the expected approval in January are on track. As we approach the U.S. pediatric launch, the team has already identified 54 patients diagnosed with APDS aged 4 to 11. One-third of those patients are already on therapy through Pharming's early access program and with many others likely to go on therapy soon after launch. So this represents an important growth driver for Pharming, which starts in just a few months. I'd like to now hand over to Anurag, who will discuss our development programs and the forthcoming data presentations at the American College of Allergy, Asthma and Immunology later this week in Orlando.

Thanks, Steve. In addition to the commercial successes in the quarter, we continue to advance our pipeline in the past three months. In APDS, as you mentioned, Steve, the FDA granted priority review for our sNDA for 4- to 11-year-old children, underscoring the seriousness of the disease and the potential to offer a new treatment option with leniolisib. We also have regulatory filings under review in Europe, Japan, and Canada with approvals anticipated in 2026. We have two Phase II proof-of-concept studies for PIDs with immune dysregulation, and these are also on track for readouts in the second half of '26. And then our newest addition to the pipeline is also progressing nicely, KL1333 in a registrational study for primary mitochondrial disease, where enrollment and site activation are advancing, and we continue to expect to read out in late 2027. As you recall, there was an important publication in Cell in June. This work has implications for the variants of uncertain significance or VUS reclassification work, which is ongoing by the labs. The publication in Cell, however, also opens another potential avenue to expand the APDS population. Specifically, the paper found more than 100 new gain-of-function PI3K delta variants. What surprised the researchers was that these gain-of-function variants were much more commonly found in population databases, suggesting an APDS prevalence up to 100 times higher than current estimates as well as a broader set of clinical symptoms. This raises a number of key questions to determine how these variants may cause disease, including which variants cause clinically meaningful gain of function, what symptoms and diseases do these variants cause, and how do we find patients with these variants. We started a number of activities now to help answer these questions. First, we're convening a global KOL at the AG Board this month to address how these variants can cause disease. In parallel, we're sponsoring work to build a predictive AI-driven model that could identify patients who could benefit from targeted PI3K delta inhibition with the goal then to be able to apply the model to large EMR databases. And given the significant findings, we can actually identify more gain of function variants with newer base editing technologies. Generating additional variants will be important not only to understand the broader prevalence, but also for the ongoing VUS resolution project. So much more to come on this exciting work. We also have new data being presented at the American College of Allergy, Asthma, and Immunology. There are five posters on RUCONEST where we performed a reanalysis of our clinical trial data with recently used definitions of key endpoints. These data highlight the key symptom benefits in HAE patients experience with RUCONEST across a number of clinically relevant outcomes. In addition, an indirect treatment comparison with sebetralstat will be presented, providing additional evidence for the unique benefits that RUCONEST offers HAE patients. On the APDS side, we have posters describing the treatment burden of the disease on both patients and caregivers. We also have a number of posters on Joenja with real-world data highlighting key benefits, including a reduction in infections. Lastly, ahead of our expected pediatric approval, we have new data in this 4- to 11-year-old APDS population, showing important outcomes, especially on quality of life improvement seen in the study. I'll turn it over now to Kenneth, our newest member of the team, to review our financials.

Thank you, Anurag. As the new CFO, I'm excited to have joined Pharming at such an exciting time and have the opportunity to provide more color on our strong financial performance and outlook. Q3 was an excellent quarter with revenues at $97.3 million, up 30% versus the same quarter last year. We saw double-digit revenue growth for both RUCONEST and Joenja. Gross profit grew by 33% to $90.2 million, mainly due to the higher revenues. And accordingly, we recorded a gross margin of 93% versus 91% same quarter in 2024. Our operating profit with a slight adjustment, as it's noted here on the slide, almost increased to 4x to $16.0 million compared to $4.1 million last year. That came from growth in revenues, the improved gross margin, and well-managed operating costs. Cash and marketable securities increased from $130.8 million at the end of the second quarter to $168.9 million at the end of Q3. This increase was driven by significant cash flow from operating activities with $32 million. And as Fabrice mentioned, the total balance of cash and marketable securities is now back in line with the end of 2024 prior to the Abliva acquisition. Our year-to-date consolidated financial numbers for the first nine months show continued strong execution of our strategy. Total revenues grew by 32% to $269.6 million due to strong double-digit revenue growth for both products, and gross profit grew by 35%. Operating expenses increased by $29.2 million, excluding $20.4 million of Abliva-related acquisition expenses, and our operating expenses were up by only 4%. Adjusted operating profit, excluding nonrecurring Abliva acquisition-related expenses, was $29.7 million, which compared to a loss of $15.3 million for the first nine months of 2024. Cash flow from operating activities was $44 million in the first nine months of the year. Following the strong results for the first nine months, we are raising our 2025 total revenue guidance to $365 million to $375 million, up from $335 million to $350 million. This implies full-year revenue growth between 23% to 26%. The increase is due to continued strong performance and outlook for the remainder of the year. We continue to expect total operating expenses between $304 million to $308 million; this assumes constant foreign exchange rates for the remainder of the year, includes $10.2 million of nonrecurring Abliva acquisition-related transaction expenses, and excludes approximately $7 million in one-time restructuring costs related to the implementation of our G&A reduction plan. We continue to expect that our available cash and future cash flows will cover the current pipeline and related prelaunch costs. Going forward, we'll further accelerate setting the foundation for strong financial discipline with investments into areas that matter the most to spark near- and long-term value creation. On a personal note, I came to Pharming given my deep belief in its mission to bring life-changing therapies to rare disease patients and so the strong potential to develop a leading global rare disease company. I see great opportunity to sharpen our focus on profitable growth, effectively allocate capital to maximize return on investments, and improve transparency and predictability in our financial reporting. And with that, let me hand back now to Fabrice for closing remarks.

Thank you, Kenneth. So in summary, we are really pleased to report yet another strong quarter, reinforcing the strength of our business for sustainable growth and long-term value creation. As you heard from Kenneth, as a result of this performance and our outlook for the remaining of the year, we are raising again our full-year guidance. Looking ahead, RUCONEST is poised to continue to grow and to remain the cornerstone treatment for severe HAE patients, underpinning a strong revenue base. Joenja is well positioned to generate a significant portion of our revenues in the future given strong growth and the additional opportunities we are actively unlocking. Our high-value pipeline is advancing rapidly with a clear objective to deliver two potential blockbuster assets, creating a meaningful value creation catalyst for shareholders. And we are also taking decisive steps to enhance financial discipline, including optimizing G&A headcount to ensure efficient capital allocation and maximizing our return. I'd like to end this call by expressing my sincere gratitude to Steve Toor for his contribution to Pharming over the past nine years. We look forward to his continued support as an adviser to the company, and we are very excited to welcome Leverne Marsh as our new Chief Commercial Officer to drive the next phase of commercial growth. Let me now open the line for questions.

First question comes from Jeff Jones of Oppenheimer.

Congrats on a really strong quarter. Two questions from us. With respect to RUCONEST, can you speak to any impact you're seeing from the new oral that has come onto the market? Where do you see it being adopted? Do you anticipate any pressure on your patient base? And then for Joenja, you mentioned that one-third of the pediatric patients already identified are currently on therapy through early access. Any impact on revenue from these patients when the product is formally approved next year?

Thank you for your question, Jeff. Regarding RUCONEST, we do not see it competing directly with sebetralstat, so I can't comment on its performance. I believe our product offers a unique value proposition for a different group of patients, particularly those with more severe conditions. This is due to its unique mechanism that addresses the underlying deficiency in the disease and its specific administration method. I think many more patients, especially those not adequately managed with on-demand treatments, could benefit from RUCONEST. This group represents the majority of RUCONEST users, who have struggled to find effective control with other treatments and have seen the required efficacy with our product. Regarding the pediatric aspect of Joenja, we have already identified 54 pediatric patients in the U.S., with about a third currently on our early access program. We anticipate being able to transition these patients to regular treatment fairly quickly. In the context of rare diseases, we expect an influx of patients to begin treatment. This will be in addition to those already identified for RUCONEST, and we are committed to finding more pediatric patients. The typical sequence involves first transitioning patients from the access program, then bringing on identified patients based on physician decisions, and finally identifying new patients. We expect this process to unfold next year. Given the number of patients we have identified, we believe expanding the pediatric label will significantly contribute to growth and enhance our current business with adults aged 12 and older.

Next, we have Lucy Codrington from Jefferies.

I have a few questions. First, regarding RUCONEST, have you provided a timeline for when the decision to discontinue it outside of the U.S. will take effect? Also, concerning the competitive threat from Ekterly, I understand the different positioning of the drugs, but how frequently are HAE patients typically seen by their specialists if there is a possibility of switching? Moving on to Joenja, are you satisfied with the progress related to the VUS opportunity? I heard we might start seeing VUS patients in the second half, but your guidance seems to indicate otherwise. Is it possible that this will be delayed until 2026? What's the process for VUSs outside the U.S.? Additionally, regarding compliance rates for Joenja, previously it was around 85%. Are you still comfortable with that figure? Lastly, what do you estimate the peak potential for identifying patients in the U.S. might be? I apologize for so many questions.

Thank you, Lucy. I'll address all your questions. I'll begin with RUCONEST and the delisting concerns in certain European countries. We aim to finalize this by the end of the first quarter or the first half of next year. The decision is primarily due to the lack of sustainable commercialization of RUCONEST in these regions. With various growth opportunities ahead, we aim to be financially responsible and allocate our capital wisely. We are collaborating with all relevant parties in those countries to ensure patients have access to the appropriate treatments and, if necessary, maintain a supply of RUCONEST through compassionate use programs. Regarding Ekterly, I want to clarify that RUCONEST and Ekterly cater to different patient groups, so I don't consider Ekterly a threat to RUCONEST. RUCONEST is designed to replace the missing or deficient protein linked to the disease, offering a fast onset of action, which is particularly beneficial for patients with more severe cases who have not responded well to other treatments. Thus, most RUCONEST patients are those who experience frequent and severe crises. Now, moving to your question about Joenja in the U.S. As Anurag mentioned, testing laboratories are actively engaged in discussions with the researchers behind the Cell publication. We anticipate that over time, about 20% of U.S. patients will be reclassified as having APDS. We must remain fairly detached from ongoing developments, but we hope for productive discussions leading to some patient reclassifications. The adherence rate for Joenja has remained strong, consistent with the figures you mentioned. Regarding patient identification, we are pleased to report that our efforts have resulted in identifying 13 new APDS patients in the U.S. during Q3, demonstrating our ability to reach individuals suffering from this ultra-rare disease. Regarding the potential patient population, there are at least 500 patients in the U.S. with APDS based on prevalence, and with the expected reclassification of 20% of patients, we could see a 50% increase in this population. Anurag also highlighted that the research published in Cell suggests that APDS prevalence may be much higher, presenting potential upside that is yet to be quantified. I've shared some tangible figures, and while the exact potential remains uncertain, the authors even suggested it could be up to 100 times more, which still needs verification. We have a solid plan to provide more information next year. I hope I answered your questions, Lucy.

Next we have Sushila Hernandes from Van Lanschot Kempen.

This is Maridith for Sushila from Van Lanschot Kempen. I have two questions. First, given your more disciplined approach, what are your priorities for capital allocation? Can we expect another M&A transaction similar in size to Abliva? And second, how is your basket PID trial progressing? And when can we expect top line?

Hi, thank you, Sushila. Thank you for calling out the disciplined capital allocation. That's true. And hopefully, it was very apparent. And with Kenneth joining, clearly, I'm extremely happy that given his track record, I'll be able to really embed that mindset, which is absolutely essential if you want to run a high-performing organization. I think as you see, we have a number of growth catalysts in our commercial portfolio in the short term. We also have a number of pipeline catalysts next year and the year to come. So when it comes to value inflection point, growth catalysts, we have a lot, and we are committed to showing that we can execute. Now it is true that we have higher ambitions, but there is no rush actually in doing any M&A. Obviously, given the strong growth platform, our ability to generate cash, and the very strong capability platform that we have built over the years in clinical development, in supply chain, in commercial, and in access, I believe we can be much more ambitious, and we should be looking at the continued expansion of our portfolio and our pipeline. And such, we are continuously looking at potential opportunities to expand our portfolio and pipeline. So there is nothing planned. There is no rush. Anything that we would want to do will have to be value accretive for our stakeholders and shareholders. But clearly, this is something that we keep in mind. It is part of the work that we're doing. And if we find the right opportunity, obviously we will engage with our shareholders.

And I think you had asked also about the basket PID trial. And if you remember, this is a study with multiple genes that can drive the PI3K pathway, a Phase II proof-of-concept study. And this study is actually progressing very nicely. We continue to expect readout from the study in the second half of '26. So a very exciting program, along with the CVID program, both on track for second half '26 readout.

Next we have Joe Pantginis from H.C. Wainwright.

This is Josh on for Joe. So I just wanted to ask a question about the new formulation. If you could give any more color on this new pediatric formulation for the 1- to 6-year-old group? And if there's any specific manufacturing hurdles that you may need to clear for this formulation?

We have developed a new pediatric formulation specifically for the youngest age group, as children in this range typically cannot take tablets like those available for older kids and adolescents. This new formulation consists of granules, which we have manufactured and tested through pharmacokinetic studies. We have completed the study for the 1- to 6-year-old population and plan to follow a similar regulatory process. We've also been in discussions with the FDA regarding both the formulation and the study design, and everything is progressing as planned.

Next, we have Natalia Webster from RBC.

Firstly, I just wanted to ask around your revenue guidance uplift, just confirming how much of this comes from better-than-expected RUCONEST versus Joenja. And then in particular, for RUCONEST, how you're expecting that to develop into Q4 and 2026, given that you're not seeing much pressure from competition and also continue to see increases in prescribers and patients there? My second question is on Joenja and the international rollout. It seems that this is contributing around 11% this quarter. So curious to hear a bit more about how that's evolving and how you expect that mix to evolve over time? And then thirdly, just around the RUCONEST withdrawal from ex-U.S. markets. Are you able to comment a bit on the savings you'll make from this and where you plan to redirect those resources?

Thank you, Natalia. Regarding our revenue guidance, as Kenneth mentioned, it has been influenced by the ongoing strength of our business that we've experienced in Q3 and throughout 2025. RUCONEST is certainly significant due to its contribution to our overall revenue. This upgrade stems from both the sustained performance of RUCONEST and Joenja. The new guidance indicates growth for the year of between 23% and 26%. We have not yet issued guidance for next year, but we expect RUCONEST to keep growing as it addresses a specific patient population and presents a unique value proposition for those with more severe conditions. Additionally, we anticipate increased growth for Joenja. Until now, we've been able to source patients solely from the 12-year-old plus APDS patient population, but we expect to unlock a new patient base with the anticipated label expansion to the pediatric population, which will add a significant number of patients. We have already identified 54 patients, a considerable number, with about one-third already on the medication, which we hope to convert quickly. Identifying these patients increases the likelihood that they will be treated, and we will keep working to find more patients. We also see other growth opportunities, particularly in the U.S. and through geographic expansion. The launch in the U.K. is progressing well, which is encouraging and demonstrates our capability to launch Joenja in additional countries. We have identified eight markets outside the U.S. where we believe we can build a strong business for Joenja. We will implement this strategy while ensuring that reimbursement authorities in these countries are willing to reimburse the drug at an appropriate price. Our goal is not just to launch for the sake of launching; we have an access program to allow patients to benefit from the drug now. While we are not a philanthropic organization and require reimbursement for our drug, we will do so responsibly. Regarding the RUCONEST withdrawal, we need to be more disciplined in capital allocation. We determined that maintaining RUCONEST's commercialization in certain countries was not financially viable. We will take great care to ensure that patients continue to have access to the appropriate treatment. The financial impact of this decision is challenging to quantify but will be minimal, as most of our revenues come from the U.S., so I do not expect any significant effects on either our top or bottom line. This is part of our broader efforts to manage our cost structure more effectively.

Our last question comes from the line of Simon Scholes from First Berlin.

I have two questions. You reported a gross margin of 92.7% in the third quarter, which compares to 90% in the first half and 89% in 2024. How should we view the gross margin in your current markets moving forward? Do you believe this 93% is sustainable? Also, you mentioned an increase in more severe frequent attack patients. Does this mean that these patients are becoming a larger percentage of the total patient population?

I will begin with the latter point and allow Kenneth to elaborate on the gross margin aspect. It is accurate that RUCONEST caters to a unique population in the on-demand market, specifically more severe patients. By more severe patients, I refer to those experiencing more critical and often life-threatening crises, as well as more frequent crises. This demographic forms the majority of the patient base. As the revenue from RUCONEST has progressed, this trend has become more prominent. RUCONEST is primarily utilized for these severe patients who face more intense and frequent episodes, and I believe this will remain constant. Other treatment options may emerge for different patient types, but RUCONEST will continue to address the needs of these severe patients, benefiting from the trust established within this group and among healthcare providers. This is further demonstrated by the consistent increase in the number of prescribers using the drug, even after a decade in the market. Regarding the gross margin, I will pass it over to Kenneth for further details.

Yes, thank you. Thank you, Fabrice, and thanks for the question. It's obvious that we have a high gross margin, and it's impacted also by the mix of sales across different geographies. As you see, so to say, the Joenja share growing and faster growing than RUCONEST, we're having a benefit coming from that. So we don't want to kind of give specifics in terms of the forward-looking performance, but I think you have seen kind of a slight increase on a continuous basis as we start to build out the Joenja sales to a larger extent. So I think Q3's performance is very encouraging, but we are not at this point in time giving the specifics around forward-looking, but think about it in that context of the Joenja share growth.

That concludes the Q&A session. I will now hand back to Fabrice for closing remarks.

Thank you very much, operator. Thank you all for attending this call and for your continued interest in our company. With that, I'll close the call. Thank you.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.