Pharming Announces FY09 Q3 Results

Biotech company Pharming Group NV ("Pharming" or "the Company") (NYSE Euronext: PHARM) announced today its results for the first nine months of 2009 ended September 30, 2009.

Key financial developments

* EUR 20.0 million Standby Equity Distribution Agreement ("SEDA") signed with YA Global Master SPV LTD ("YA Global") in April 2009, plus a EUR 10.0 million extension in October 2009. Total financing under the SEDA received in first nine months 2009 of EUR 6.6 million, with another EUR 23.4 million available to date;
* EUR 70.0 million convertible bonds (issued in 2007) reduced to EUR 35.8 million at September 30, 2009 from EUR 49.9 million at year end 2008. Additional EUR 24.9 million cleared in the fourth quarter of 2009 to further reduce convertible debt balance to EUR 10.9 million;
* Operational costs of EUR 21.5 million in the first nine months of 2009 (EUR 18.5 million in the same period of 2008) driven by the submission of the EU Marketing Authorization Application for Rhucin(R) in September 2009, intensified efforts for the Rhucin program in North America and preparation for continued clinical activities of Prodarsan(R);
* Net loss in the first nine months of 2009 of EUR 23.1 million, as compared to EUR 19.5 million in the first nine months of 2008.

Discussion of financial transactions and financial position In 2009, the Company entered into several equity transactions and convertible bond settlements.

Standby Equity Distribution Agreement with YA Global

In April 2009, Pharming signed into a EUR 20.0 million Standby Equity Distribution Agreement with YA Global. Under the terms of the April agreement, YA Global can invest a total of up to EUR 20.0 million in a three year period. Pharming has the right, but not the obligation, to call the funds in regular tranches. In the second quarter of 2009, the Company started using the SEDA and called a total amount of EUR 2.8 million in cash in exchange for the issuance of approximately 4.6 million Pharming shares, followed by another EUR 3.8 million in cash in the second quarter in exchange for another 7.3 million shares issued.

On October 5, 2009, YA Global and Pharming announced that the original agreement has been extended with another EUR 10.0 million, so the total facility amounts to EUR 30.0 million of which EUR 23.4 million is available as per today. At closing of the agreement in April, Pharming issued a one-off payment of 0.8 million commitment shares with another 0.4 million commitment shares paid upon extension of the agreement.

Convertible bonds settlements and public offer

In the first half of 2009, Pharming entered into various agreements with several holders of bonds issued in 2007. Under these agreements, the Company successfully cancelled a total outstanding amount of EUR 14.1 million nominal bonds in exchange for EUR 1.0 million cash and issuance of 9.5 million shares. Following these transactions, the outstanding nominal value of bonds was reduced from EUR 49.9 million at year end 2008 to EUR 35.8 million.

On September 21, 2009, the Company launched a public offer on the EUR 35.8 million remaining bonds outstanding, under which bondholders were invited to exchange bonds (nominal value of EUR 50,000 each) into cash and shares (EUR 7,500 cash and 59,000 shares per bond). On October 8, 2009, Pharming announced that bondholders representing a nominal value of EUR 24.9 million (70% of outstanding bonds) had accepted the offer and subsequently the Company paid EUR 3.7 million in cash and issued 29.3 million shares.

In order to finance the EUR 5.4 million cash portion of the public offer, the Company transferred EUR 3.4 million of existing cash resources to an escrow account with the remaining EUR 2.0 million funded by existing investors. The funding by these investors would become unconditional upon successful completion of the public offer, so that following the announcement in October 2009, the EUR 2.0 million is available to fund the public offer. In exchange for the EUR 2.0 million investment, approximately 3.9 million shares have been issued to the investors. The part of the escrow account ultimately not used is about EUR 1.6 million and has now become available to the Company.

Following the settlements in the first half of 2009 and the conversions in the fourth quarter, annual interest payments of EUR 4.8 million in 2008 are expected to be reduced by EUR 2.9 million to EUR 1.9 million in 2009, of which EUR 1.5 million has already been paid in the second quarter, with the payment of the remaining EUR 0.4 million scheduled for the fourth quarter.

In compliance with International Financial Reporting Standards, upon issuance of the EUR 70.0 million convertible bonds, a derivative portion of EUR 21.7 million and transaction fees of EUR 3.0 million were carved out to arrive at a net liability of EUR 45.3 million. This initial liability increases in subsequent periods through charging an effective interest rate in order to, ultimately, fully equal the total amounts of nominal interest payments of 6.875% and the redemption payment over the total five year period. As a result, the carrying value of the bonds at the end of each reporting period is lower than the nominal value of the outstanding bonds. At September 30, 2009, the total carrying value including the short-term portion of nominal interest due is EUR 27.8 million as compared to nominal bonds of EUR 35.8 million outstanding. Since formalization of the conversions took place subsequent to September 30, 2009, the effects will be recognised in the financial statements for the fourth quarter of 2009.

Discussion of results

In the first nine months of 2009, the Company's income increased from EUR 0.4 million to EUR 0.5 million, in particular as a result of grants received based on increased costs eligible for grants and increased facilities on certain grant programs by the Dutch government.

Operational costs increased from EUR 18.5 million in the first nine months of 2008 to EUR 21.5 million in the same period of 2009. The EUR 3.0 million increase primarily results from increased costs of research and development (from EUR 14.8 million to EUR 17.5 million), reflecting Pharming's submission of a Marketing Authorization Application (EU) for Rhucin in September 2009. At the same time, the Company is intensifying its efforts for the Rhucin development program in North America and to prepare for clinical trials of Prodarsan. Pharming's general and administrative costs increased from EUR 2.0 million to EUR 2.5 million, which among others reflects costs incurred with respect to preparation of the public offer to the bondholders as described earlier.

Operational costs for the first three quarters of 2009 included EUR 1.5 million for non-cash items compared to EUR 1.7 million in the comparative period in 2008. Costs of share based compensation programs and deprecation and amortization charges remained fairly constant but contrary to the first nine months of 2008 no operating asset impairment charges were incurred.

Financial and other income and expenses in the nine months ended September 30, 2008 and 2009 were highly affected with non-cash valuation adjustments in relation to convertible bonds, marketable securities and deferred tax items as well as interest derived from cash and marketable securities. In total, net losses from these items in the three quarters of 2009 were EUR 2.1 million compared to net losses of EUR 1.4 million in the nine months ended September 30, 2008.

As a result of the equity transactions and convertible bond settlements described earlier, Pharming's total number of outstanding ordinary shares increased to 154.501.037 at October 8, 2009. According to notifications pursuant to the Act on the Disclosure of Major Holdings and Capital Interest in Securities-Issuing Institutions ('Wet melding zeggenschap en kapitaalbelang in effecten-uitgevende Instellingen'), the following major shareholders are currently known to Pharming:

Number of
Major Holdings Notification date outstanding Shareholding
shares at percentage
notification date
A. van Herk October 8, 2009 154.501.037 4.88
Lafferty Limited December 9, 2008 97.429.854 9.97
UBS AG October 8, 2009 154.501.037 8.30

"Over the last ten months, we have managed to reduce our convertible debt, while being able to protect our shareholders interests against the threats of highly dilutive restructurings. We are very pleased with the increased holding of UBS, one of the largest financial institutions in the world. Other decreased shareholdings are mainly a result of the recent successful bond transaction," said Dr. Sijmen de Vries, Chief Executive Officer. "We also remain confident about the Company's perspectives, which amongst other things includes steady progression on partnering discussions pertaining to our lead product Rhucin and with other activities aimed at strengthening our financial position."

About Pharming Group NV

Pharming Group NV is developing innovative products for the treatment of genetic disorders, ageing diseases, specialty products for surgical indications, and nutritional products. Pharming's lead product Rhucin(R) for acute attacks of Hereditary Angioedema has passed clinical development stage and the Market Authorization Application is under review with EMEA. Prodarsan(R) is in early stage clinical development for Cockayne Syndrome and lactoferrin for use in food products The advanced technologies of the Company include innovative platforms for the production of protein therapeutics, technology and processes for the purification and formulation of these products, as well as technology in the field of DNA repair (via DNage). Additional information is available on the Pharming website,

This press release contains forward looking statements that involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from the results, performance or achievements expressed or implied by these forward looking statements.

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