Pharming N.V.(PHAR) - 2021 Q4 - Annual Report

Revenue Performance - Revenues from the sale of RUCONEST® for the treatment of acute HAE attacks were US$198.9 million in 2021, a decrease of 6.3% from US$212.2 million in 2020[420][441] - The U.S. market accounted for US$193.4 million of RUCONEST® sales in 2021, down from US$202.7 million in 2020, primarily due to the impact of the COVID-19 pandemic[441][444] - Revenue in Europe decreased to US$4.9 million in 2021 from US$8.2 million in 2020, attributed to phasing of ordering[442] - Two U.S. customers represented 79% of total revenues in 2021, highlighting reliance on a limited customer base[443] Operating Profit and Costs - Operating profit for 2021 was US$13.6 million, a significant decrease from US$76.3 million in 2020[440] - Cost of sales decreased by US$2.4 million, or 10.2%, from US$23.5 million in 2020 to US$21.1 million in 2021, with product sales costs at US$19.1 million[445] - Gross profit decreased by US$10.9 million, or 5.8%, from US$188.6 million in 2020 to US$177.7 million in 2021, primarily due to reduced sales in the U.S. and EU[448] Research and Development - The company is developing rhC1INH for additional indications, including pre-eclampsia and AKI, which may require significant investment and regulatory approval[422] - The leniolisib Phase 2/3 clinical trial has been completed, and the company plans to submit a New Drug Application (NDA) to the FDA in mid-2022[423] - The company incurred research and development costs of US$70.4 million in 2021, up from US$38.5 million in 2020, reflecting increased investment in product development[440] - Research and development expenses increased by US$31.9 million, or 82.7%, from US$38.5 million in 2020 to US$70.4 million in 2021, mainly due to investments in clinical studies[452] Administrative and Marketing Costs - General and administrative costs increased by US$12.9 million, or 53.5%, from US$24.1 million in 2020 to US$37.0 million in 2021, largely due to impairment losses and additional administrative resources[454] - Marketing and sales costs increased by US$7.8 million, or 15.2%, from US$51.6 million in 2020 to US$59.4 million in 2021, driven by expansion in the U.S. and Europe[455] Financial Performance and Cash Flow - Other income related to grants increased by US$0.8 million, or 43.2%, from US$1.8 million in 2020 to US$2.6 million in 2021[451] - Other finance income surged by US$14.2 million, or 1983.1%, from US$0.7 million in 2020 to US$14.9 million in 2021, primarily due to favorable currency effects[460] - Other finance expenses decreased by US$27.1 million, or 81.4%, from US$33.3 million in 2020 to US$6.2 million in 2021, attributed to currency exchange rate changes and absence of settlement fees[463] - Income tax expense increased by US$0.7 million, or 11.6%, from US$6.3 million in 2020 to US$7.1 million in 2021, despite lower profit before tax[467] - Net cash flows generated from operating activities were US$37.8 million in 2021, down from US$83.6 million in 2020[515] - The company anticipates that sales of RUCONEST® will continue to cover operating costs and finance costs in 2022[513] Capital Expenditures and Financing - Net cash flows used in investing activities increased to US$21.3 million for the year ended December 31, 2021, compared to US$15.6 million in 2020, primarily due to capital expenditures of US$10.7 million[519] - The company experienced a net cash outflow of US$27.9 million from financing activities for the year ended December 31, 2021, a significant change from a net cash inflow of US$60.7 million in 2020, mainly due to the absence of proceeds from convertible bonds[521] - The company issued €125 million of 3.00% convertible bonds due 2025 on January 21, 2020, with net proceeds used to redeem US$51 million of a loan and support capital expenditures[523] - Capital expenditures in 2021 were primarily related to investments in new production facilities and machinery, totaling US$10.7 million[519] Future Outlook and Risks - The company expects an increase in research and development and administrative costs due to ongoing clinical trials and product development[509] - The company may consider raising capital through equity or debt to support acquisitions or in-licensing of additional assets if favorable terms are available[514] - The company expects to continue facing uncertainties due to the ongoing COVID-19 pandemic, which may impact future sales growth[424] - The company’s financial risks include liquidity, market risk, and credit risk, with the Board responsible for risk management policies[692]