Welcome to the Pharming Group NV Half Year Results Webinar. Throughout the call, all participants will be in listen-only mode. And afterwards, there will be a question-and-answer session. Just remind you, this conference call is being recorded. Today, I'm pleased to present Dr. Sijmen De Vries, the CEO and Robin Wright, the CFO. Please begin your meeting.

Thank you very much for the introduction. Ladies and gentlemen, good afternoon. Yes, I'm Sijmen De Vries, indeed the CEO of Pharming and indeed here with Robin Wright our Chief Financial Officer and we have the pleasure to present our first half results to you. Before, we do that, of course, I would like to draw your attention to this forward-looking statement slide, I'm sure you are familiar with the statement. Please be aware that we will be making some forward-looking statements, which fall under the protection of this Safe Harbor statement. Having said that, let's move on to the next slide dealing with the half year results and take you to Slide number 4, one of my favorite pictures, of course, from this presentation because as you can see, we are very pleased to report these results at this point in time, with very strong growth from existing and new patients using Ruconest to treat their HAE attacks and increasingly Ruconest also becomes a preferred therapy for breakthrough of HAE attacks, the patients using drugs for lactic therapies. I will come to that in a minute. And, of course, I will not go into any details with regards to the numbers. I will leave that to the Chief Financial Officer would rather take you through a little more of the -- these things behind this sustained growth which we have now showing for the third year in succession especially the U.S. market. So, let's move on to what is behind this growth of Ruconest and if we can see there is a changing HAE landscape, which is really a good news for patients suffering from HAE because multiple treatment options providing better management of HAE has become available. However, first and foremost, I think behind the growth of Ruconest…

Thanks Sijmen. So, it's always good to be in a position to report that we are continuing to deliver record revenues and that is what we have done again this quarter and this half. The first half revenue increased 31% to €77.9 million compared with €59.5 million last year in the same period. And quarter-on-quarter, we also managed to lift revenue very significantly from by 21% to €42.7 million in quarter two compared with 35.2 in quarter one for the reasons that Sijmen has just outlined. U.S. product sales within that increased 33% to 75 million compared with 56.3 million last year. Again on quarter-on-quarter growth was the same at 21% reaching €40.9 million compared with €33.7 million last year reflecting very, very strong growth in our highly competitive marketplace as Sijmen has just described. And in the EU and the rest of the world, the product sales were relatively flat. These markets are very competitive. They are much lower priced; it's much harder to move the needle in those markets. We did see increased competition in certain eastern European markets which unfortunately affected our partner SOBI a little bit. And that was because of product launches by those competitive products. At the same time, we've got limited growth from Pharming's own business, which were affected by national revenue caps which are a feature of operating in Europe. These are caps in which the national government can say well you can sell up to so much, but then you have to give 90% of your sales price back to the government, which is all very well, but it does mean that it's very hard to progress sales beyond certain numbers. When it comes to the investments that we've been making on the cost base, we did see our operating profit…

Thank you, Robin. Yes. And for the remainder of 2019 as you can see here, we do expect to continue the growth on revenues from the sales of Ruconest mainly driven by the U.S. market and also in some way by the Western European operations. We also continue to expect to achieve positive net earnings during the remainder of the year. We, however, also remain continued investment in the expansion of production of Ruconest to supply the growing demand for Ruconest. Investment in clinical trials as Robin was already alluding to for pre-eclampsia and acute kidney injury, you can expect increasing investments there and support for investigators wishing to explore additional indications for Ruconest. And a very successful example was the one of course last year where Professor Gustaaf delivered great results from that double-blind placebo-controlled trial for acute kidney injury. And then, there's something new here, we have taken a re-evaluation of the most advantageous new routes of administration while we focus on supplying all patients that look for Ruconest therapy. That's a different from the past. We were looking for more convenient indications in the rather narrow way. We've listened very carefully to what patients tell us what they want. The market has moved on of course in this respect as well. And we have taken a very broad re-evaluation and we're looking at far more novel technologies to apply Ruconest in a very convenient way and hopefully in a painless way towards the future. We also continued our investment in development of new pipeline programs such as Pompe disease, which you heard and also Fabry disease behind that. And then, last but not least, you haven't heard anything about it of course there so far because there's nothing to report, but we are actively looking to purchase or license other new development opportunities and assets in the company's portfolio. And, of course, business development is always something -- there's always something to report when a deal is done. That's why you've never heard of it, but we are actively looking in the market to expand our portfolio and we now have the wherewithal and the infrastructure of course to do this. And then, last but not least, the supporting all our teams and marketing partners in order to enable the maximization of sales and distribution potential for Ruconest as in all territories. That completes the outlook for 2019. And now I would like to open the floor for any questions that you may have. Thank you for your attention.

Thank you. [Operator Instructions] And our first question comes from the line of Simon Scholes of First Berlin. Please go ahead. Your line is now open.

Yes. Hello. Congratulation on a greater result. Just with respect to supplies of Ruconest. I was wondering if there's a situation in which you can envisage pressure on supplies coming in the U.S. in the second half of this year before your new capacity starts up.

Yes. No, we do not anticipate that Simon. We anticipate specifically some pressure in Europe because as I said in my presentation very early on in the production process, we need to determine because there's different release specs for the territories for U.S. and EU. We need to determine whether Ruconest goes. And that means that already a long time ago, we had to basically confirm all of this. And when you get confronted with unexpected demands -- demands in the European Union and outside of the European Union, but not in the U.S. you get these things. So for clarity, no, we didn't expect the issues in the U.S., but we do expect that it could be some tension on the inventories that we currently have for the remainder of the year, for the year European territories.

Okay. Thanks very much.

Thank you. Our next question comes from the line of Christian Glennie of Stifel. Please go ahead. Your line is now open.

Hi. Thanks for taking the question. Couple of if I can. Firstly, on the market dynamics, is it right to characterize it, or assume that it does seem to be issues from a competitive standpoint, the other players going after the prophylaxis seems to have almost retrenched a bit from an acute positioning of these products for acute treatment the likes of Firazyr and Berinert. Is that a fair reflection in terms of what you're seeing in -- what seems to be improvement in terms of your market share?

Well, it's more complex than that I think. It is really, as we move on into this market we begin to understand patient behavior more. So patients in the U.S. have multiple medication in hands and it is considered a good practice to have also a number -- even if you're on prophylaxis, it is considered good practice in all patients have a number of rescue therapies at hand. And when you then look at what kind of rescue therapies you have at hand because of the domination of the historical explanation of Shire in the prophylaxis treatment and in the acute treatment with Firazyr, you saw that and Ruconest, of course, just coming into the market and being used by severely affected patients only, you will -- you see that -- you first get using those for very severe patients. And then, you gradually get credibility there as it were, and then you see that spending and then the next thing of course is that when we showed the Berlin study that said this, a real world study that we published last year in December where we showed the amount of breakthrough attacks that are associated with Firazyr treatments that are again probably opened the eyes of many towards now how effective C1 inhibitor therapy actually is in treating your breakthrough attacks. I think every little bit helps here. So again, maybe being longer in the market by knowing better what patients want by really listening to patients and giving patients what they want. I think we succeed in not only getting Ruconest in natural [Technical Difficulty] severe affected patients, but also now are beginning to get traction more -- far more traction than we had -- far more traction we had exactly in that that segment of breakthrough attacks. It's an incredibly complicated market to actually analyze because every time you must realize it's all home treatment, so every time a patient gets an attack, the patient eventually makes not a doctor, but a patient makes the choice of which therapy the patient uses for that particular breakthrough attack. So, that is very difficult to understand that you have to be really close to the patient. And I think all these things together mean that we find a place for Ruconest and find an expanding place for Ruconest now also in the light of the new developments in the market where still a significant amount of patients more than half of the patients are suffering from these continued breakthrough attacks. I hope that answers your question a little bit Christian. Sorry, for the long answer.

No, no. It's very helpful. I guess the one extension on that is, you've obviously seen very strong growth based on the existing formulation, the I.V. formulation which in general sense thinking of ideal world, something more, more convenient as you say more pain free option, but design maybe slightly reduced that given it is based on existing...

Yes. Let me just -- sorry to interrupt you, but I think it's important to realize that when you need the most efficacious way to deliver C1 inhibitor is obviously self injection -- IV self injection because that brings immediately 100% of the drug available and that's what you need when you have an attack and you don't want that attack to actually happen. And that is actually how this disease should be treated and is actually treated when you use Ruconest. I think that is and of course the next level is of course when you can have a more convenient treatment, but if you need the power of Ruconest, because the attack is coming through and you can't control it logically speaking that is how patients have to come to rely on Ruconest power and direct availability. So, yes, you may want something more convenient, but well if you can't get by on it, then that IV is of course the ideal way to deliver. And it's actually totally not creating any pain. This is just a procedure that is a little bit more complicated than just giving yourself a painful subcutaneous injection. I think that's what you should look at.

Okay. Thank you. And then just my follow-up in terms of production side of things. Just to confirm, I think you said already pretty clearly there's no impact in terms of the implied growth rate that you would expect in the U.S. There's no impact from a supply issue there. Even if maybe you don't -- you won't be able to do the same sort of free vial sampling that you have done previously I know that some of that was related to competitor supply issues, but just to be clear there's no impact in terms of your expectations for current year in the U.S.?

Correct Christian. Absolutely correct.

And then if I can now move on the expansion in terms of production, two more facilities potentially next year just that potentially eliminate the need or sort of how does it impact you, while you talked about before about may be needing to move back to cattle based production?

No. Those are two different things. First of all, the first facility will be -- is expected to be approved at the end probably of Q1 2020. Now there's of course the regulators are still there so that is the expectation. The second site that will be built next year, so then will be approved next year or after. The first site will be very sufficient to actually satisfy the needs for Ruconest production HAE. For the future, of course, the long-term future, we have reinstalled the cattle platform because the numbers of vials necessary for any of the new indications AKI and pre-eclampsia, the rabbit platform will be unpractical. And that is why in the longer term, you will again hear, when we are switching over and there will, of course, have to be you know bridging studies in these programs AKI and pre-eclampsia. So following the first proof of concept, we expect to do that, but that will be a switch over to the cattle project and that's a long-term -- that's a longer term -- this is a longer term solution to supply those new indications. So HAE is rabbit platform, there will be more than sufficient capabilities to produce Ruconest by means of the rabbit platform and the new indications will move to the cattle platform.

You bet.

And if I could add to that Christian that the -- facilities that we're building for the rabbit platform are not simply for Ruconest. They will certainly help us, if Ruconest outperforms a long time, but we will also need them for although the case days and other protein rabbits as well. So it's long-term planning. These are not particularly expensive facilities, but they did take a lot of cash and a lot of attention to get them right for the regulators.

Does that answer your question Christian?

Yes. Thank you. I will now move on.

Thank you, Christian.

Thank you. Our next question comes from the line of Scott Henry of ROTH Capital. Please go ahead. Your line is open.

Thank you for taking the questions. I guess first question with regards to supply coming back on stream in the first quarter '20. How would you characterize the risk of that event? Is that a low risk event? Obviously, the regulatory agencies have to approve it, just want to get a sense of that.

Yes. I think it can be very clear on that. It's a low risk. It's a low risk event. We have already delivered all the data and shown that of course the whole thing is doubly the same. And the comparability protocols have been fulfilled. So, it's just a matter of going through the process with the regulatory authorities, they should do this. So, that is really how we look at that.

Okay. Thank you for that color. And just for my understanding, I think it's important to understand, why is it again that the supply issue would occur in Europe and not the U.S., what are the differences there that impact supply in one geography versus the other?

Well, let me just again -- let me just repaint this picture. If we have milk coming out of all our rabbits, we need to go to purification. And very early on in the process, we have to actually decide and best in the specific batches for either the U.S. or the EU. So you will have a long-term planning of course of your sales demands at the same time you have batches coming out of the factory. And then you have to decide that is how it works with the regulators, of course, they have to decide which batch goes where. So you have a long-term planning. If then the long-term planning in an area in this case in Europe runs out of sync, you will very quickly run into problems with that. Especially, if you have a general high demand, which we of course are having, which is a very nice position to be in fact especially if you think about our recent history, but it is still a fact that we have to manage. So, therefore, we are already pretty tight on the whole thing. We plan of course go ahead. And then you are confronted in the months that it takes to process that product to final product that the demands are running out of sync because of ad hoc requests that you get from the European Union countries. And then, of course, you run into an even tighter situation. So, in other words, we were able to plan correctly and have necessary reserves with the U.S. market and we were able to plan ahead with the European markets. And of course, also it's a function of volumes, we saw a lot more volume in the U.S., so therefore the absolute number of course is easier to manage and to actually have some inventory there and in the European markets the numbers are lower and you more quickly run into problems, if you got an unexpected ad hoc demands because your competitors are running out of products. And I think that's the picture I can paint here and that is what it is. And the good news is that, we are already processing milk from that new facility throughout final product. So, the moment the facility is approved, we don't have to wait until we process that product. But, we have the product right at hand to actually supply the markets and we will do so of course as soon as we have an approval by either EMA or FDA, and relinquish the pressure. Does that answer your question Scott?

That helps considerably. Thank you for that color. If I could just shift over to the pipeline quickly, any idea when we might see data on the acute kidney injury or the pre-eclampsia programs?

Well, that's just pre-eclampsia of course that's the first, obviously, this is a very critical indication, so the authorities have -- we are close to first look at safety, which is very understanding in these first woman that we are treating. So, I would say at least a year from now, we will have to wait until we see the first data, the first stage maybe a little bit quicker, it depends, maybe a little bit longer. But then we can see the first stage of the study reporting, and then we move to the next stage of the study. With regards to AKI, as we were alluding to, we expect this study subject to regulatory approval to start in the later on towards the end of this year. So, again, if you sort of think about the study and there's a considerable follow up here, but maybe if we can organize in such a way that we can report, I know I'm speculating a little bit, my clinical development colleagues may not be so happy with this, but I'm just speculating that we can actually build in a peak when we have the acute phase behind us and we still have to wait for the follow-up then I could speculate that maybe towards the end of next year, we could have the peak -- of the first peak at the acute results whereas we still have to wait of course for the follow-up period for the longer term effects of the positive effects of this study. I think that's more or less a reasonable fair sort of way of looking at this. Okay for you?

Okay. That's great. Thank you for taking the questions.

Pleasure.

Thank you. Our next question comes from the line of Joe Pantginis of H.C. Wainwright. Please go ahead. Your line is open.

Hey guys. Thanks for taking the question. Just two quick points of clarity if you don't mind and you did address some of it in your prepared comments. Sijmen with regard to the -- you called it the re-evaluation of the most advantageous new routes. Is this sort of a mix of being able to have supply or just like you said give to patients versus you also mentioned about looking at more novel technologies. I'm just wondering to get a little more clarity about these changes here.

I think it's mainly -- we're listening to patients, I think is mainly looking at the markets what's going on here, because if you look at the market is moving on prophylaxis in the convenience direction. You see now, the standard of care becoming very quickly once every two weeks treatment. You have to realize that to deliver a C1 inhibitor in high volumes, you have to get really compress it to a really low volume. And then, still the question is whether you can actually deliver a C1 inhibitor in meaningful quantities over such a long period of time. That's the first thing, I think technically speaking. And then, again, product like CSL's [indiscernible] as a good example where you would -- you have to push in subcutaneously 6 and 4 mls twice a week, very painful and very long procedure. And if you compare that with the ease-of-use [indiscernible] where you have to -- every two weeks have to give yourself an injection. I think patients are moving off and away from that kind of subcutaneous treatments and it's a convenience -- the move comes more of a convenience driven market. Hence we decided and we are now of course a very different company than we were two years ago when we thought it was necessary for survival that we came up with something in this prophylaxis segment as well very quickly and follow [indiscernible] competitors where we don't think that's necessary anymore at this point in time because we've become much more confident of the current version of Ruconest and it's growth potential. And secondly, we therefore have now the wherewithal to take a step back and look at really innovative technology that we can combine and look at what we can actually really deliver that will be ahead of the competition for a change and not chasing the competition. So I think that is actually the way forward.

Got it. That's very helpful. Thanks. And then, the second question is more semantic, I assume with regard to everything that was discussed today about supply and you talked about planning and logistics or geographies. Do any of these supply -- temporary supply constraints impact the timing of the pre-eclampsia and kidney studies?

No. They are not affected by that.

Great. Thanks a lot guys.

Thank you.

Thank you. And as there are no further questions on the line, I'll hand the call back to our speakers for closing comments.

Okay. Thank you very much. I think I will just thank you for all for being here. And I would just like to re-emphasize that we've been very pleased with the results. We see a company that's really changing very rapidly. We are very confident about delivering further growth on revenues from the sales of the current form of Ruconest. I hope we explain to you that we see a lot more potential in the market for the current form of Ruconest than we were -- we were even thinking a year ago when we saw all these new competitors coming in the markets. We are confident that we can deliver these positive next earnings. You are also aware that we are continuing to make big investments in the expansion, but also in clinical trials going forward. And I think, it's very important to emphasize if we've become now a company that is actively looking for new assets to buy and to basically broaden our portfolio and leverage our existing commercial infrastructure because all those -- wonderful plans that we currently have of course are still quite far away from the market and therefore we're very keen to bolt-on some assets that we can actually launch before these products come to fruition. Hence why, we're very keen on getting new assets on board. Of course, like I said before business development is only relevant when you can announce something and we have nothing to announce yet. But, again, let it be known that we are actively looking in the market. So thank you very much for being here. And we look forward to updating you on our continuous progress as and when we have the final results -- the full year results for 2019 in our hands, that will be in March of next year. Thank you very much for being here. Goodbye.

This now concludes our call. Thank you for attending. Participants, you may disconnect your lines.