Hello, everyone, and welcome to the Pharming's First Quarter Results Conference Call. My name is Victoria, and I'll be coordinating your call today. [Operator Instructions] I'll now pass over to your host, Dr. Sijmen de Vries, CEO, to begin. Please go ahead.

Thank you very much, Victoria. Good afternoon and good morning, ladies and gentlemen. Welcome to our first quarter results call today. And before I go into that, I would like to go to Slide 2 and point you to the slide that shows forward-looking statements as we will be making some forward-looking statements that are based upon our current beliefs, expectations and assumptions and, of course, as you all know, things may change towards the future. So having said that, I would like to move to Slide 3. I'm here together with my two colleagues, Jeroen Wakkerman, our Chief Financial Officer; and Anurag Relan, our Chief Medical Officer, who will take you to the respective parts of this presentation. Can I have Slide 4, please? We are a well-funded business, supported by commercial sales and a growing pipeline and we focus on the treatment of rare diseases with unmet medical needs. And we can do that because RUCONEST, our lead product, is now launched in over 40 countries and recorded sales of almost $199 million in 2021. And is on its way, as you have seen from the results today, to deliver single-digit growth as we expect for 2022 over 2021. This is a very important part in time for the company here, because we have a near-term inflection point in our hands with the possible launch of our in-licensed compound leniolisib from Q1 2023 to treat the orphan disease APDS and that will, of course, be a significant different company after that because then we will be actually having two products in multiple geographies on and would not rely on one product that is mainly deriving sales from one geography, i.e., the United States. This is a rare disease, estimated according to the literature of some 1,350 patients, as…

Thank you, Sijmen. What I'd like to do today is quickly review the pathophysiology of APDS and then share with you some of the recent data that we have presented on leniolisib in treating APDS patients from the clinical studies. So if we can go to Slide 10, we can see the pathophysiology of APDS. And on the left side, you can see how a hyperactive PI3K delta pathway due to the genetic defect that these patients have, leads to this abnormal development of their immune system and specifically, the T and B cells. And due to that abnormal development, these patients with APDS end up with a whole slew of symptoms, many that are consistent with other primary immune deficiency. So first of all, of course, they get recurrent infections. So the prominent feature that APDS patients have is, what we call, lymphoproliferation. And this is just abnormal development of these -- of lymphocytes and that leads to lymphadenopathy, so swelling of the lymph node in large spleens and livers, and just abnormal lymphoid tissue throughout their body. They also have problems with autoimmunity. And due to the recurrent infections, they have problems in their lungs, specifically something called bronchiectasis and a whole slew of other problems, including GI and even neuro developmental problems. And down on the left, you see one of the other serious consequences that these patients unfortunately frequently develop, which is lymphoma. And this is due to -- it was thought to be due to that abnormal lymphoproliferation on the unchecked lymphoproliferation that these patients have. On Slide 11 -- I want to -- Slide 12, excuse me, I want to walk you through the studies with leniolisib. So on the left side, you can see Part 1, which was a dose-finding study and this…

Thank you very much, Anurag. And yes, please, Slide 20. Here you see the upcoming milestones that Anurag and his team are working very hard on and other commercial teams, the commercial teams as well, of course, to prepare themselves for launches. You see here that we're working towards the, first of all, the FDA filing of the compound, followed after the summer by the EMA and British filings. Then the pediatric studies are very high on the agenda to start later on during the second half of this year. As you know, there is already patients included up to until the age of 12. So, we're looking at the below-12s and it will be two pediatric studies starting in this perspective. As I was alluding to earlier, we're very excited about the prospect of making the move to Japan with this compound. We've had incoming requests from Japanese opinion leaders to please come to that -- to come and do a small trial. We had discussions with the Japanese authorities, and they're all very cooperative and we anticipate to be able to, this year, start that small Japanese clinical trial that is required for Japanese authorities to take this under review. And then, of course, we're anticipating the big moment, assuming this accelerated review by the FDA, which calls for an eight-month review cycle that we will be able to launch the product or get at a PDUFA date in the first quarter of '23, quickly followed by the US launch. And then, of course, the EMA, because it was filed later, will follow on later on with an approval. And then subsequently to that, in the second half of next year, we anticipate the launches in the EU countries to be rolled out across the EU. So, we're very excited about this prospect. As I was already saying, this is the route map to totally transforming the company towards a multiple company in multiple geographies, and it will take place during next year, for which we are, of course, investing very heavily. Speaking about investments, it's probably a good moment to switch over to our Chief Financial Officer, Jeroen Wakkerman, who's sitting next to me here. And we may actually go to Slide 21.

Thank you very much, Sijmen, indeed. On the next slide, you will see the quarterly development of revenues from RUCONEST over the last two years. And we're very pleased to say that we increased the revenue in Q1 2022 by 7% to $46.6 million. And out of that, as -- it may not be a surprise to you, most of it is from the US revenues. $45.3 million out of the $46.6 million of revenues was from the US, and that meant an increase in the country of 7% in revenue growth. And the increase that we saw in the number of patients was a driver of it, and it was slightly offset by tighter inventory management at larger specialty pharmacies. And -- well, as you see, the EU and rest of the world are still small, was not a strong quarter for EU and the rest of the world, but that was largely due to phasing of orders. The gross profit increased by 8% to $41.7 million and that was, obviously, mainly due to growth in revenues, but also the margin obviously increased with this growth number. And that is a combination of price increases and less discounts that we had to offer. So a margin improvement. Going two slides on, please. Yes, that one. The operating profit decreased to $2.8 million from $6.3 million last year, and that was because of the expected increase in operating expenses. The operating expense increased to $39.8 million. That's an increase of about $7 million. And that $7 million increase was a combination of several things, but half of it was because of the launch preparations for leniolisib. Other elements are increased travel activity in the U.S. post-COVID and phasing of costs. I think this is the wrong slide. Operator, could you put up the right slides, please?

The financial highlights from Q1, Slide 3.

Three out of five, correct. So I'm now at the -- I was saying that the operating profit decreased because of the cost increase and that was half of it was because of the announced increase in cost for the leniolisib launch preparation. Net profit decreased to $3.5 million, and that was caused obviously by the operating expense increase, as I just mentioned, but also a decrease in the finance income from last year. Last year, we had a big foreign exchange effect because of the euro-dollar volatility and we didn't gain as much from that this year. The cash position is still very strong. It decreased by $2.2 million, but it's still at $189.7 million, and the positive cash flows from operations amounted to positive $0.6 million. And that is obviously increasing the -- sorry, including the increased cost from the leniolisib launch preparation. On the next slides, we see the summary of this. Again, a profit before tax going from 12.8 to 4.2, and that was caused by underlying business gross profit, $3 million, mainly from the U.S., increased R&D expenditure because of leniolisib and some brands and that was related to phasing, a slight increase in G&A expenditure and most of the increase in marketing and sales expenditure is also due to leniolisib. Financial results from the -- that change was due to foreign exchange. Last year, financial results were $6.6 million, now $1.8 million. And therefore, we come to a profit before tax of $4.2 million. And on the next slide, you see some more detail on the cash and cash equivalents, again, a decrease of $2 million, and that is because of an increase in operating cash flows offset by working capital changes. We invested very little in Q1. That's expected to go up in the next few quarters. And the financing cash flow is mainly interest and lease cost. So again, a strong cash position that we will, amongst others, use for the leniolisib launch preparations. And with that, I would like to go to the next slide please to the outlook and hand over to Sijmen.

Thank you very much, Jeroen. And yes, the outlook, ladies and gentlemen, has been -- has not changed from the previous outlook that we have announced as a result of our full year results. So we continue to guide for single-digit growth in the group revenues from RUCONEST. Quarterly fluctuations in revenues are to be expected though. We still, as already stated, we are on track for Q1 '23 launch of leniolisib, subject of course to regulatory approvals. Company will continue to invest, as you have seen in these launch preparations and the clinical development obviously for the trials that I have outlined before. And this will of course significantly increase, as you have seen a significantly impacted profit as we have seen already. But it is also to be stated, and I said that before, that the RUCONEST cash flows will be able to fund these investments. So no additional financing will be needed to execute on all these things. We will also continue to invest in potential acquisitions or in-licensing of new late-stage development opportunities, as I have alluded to before, in rare diseases. And of course, if you think about in-licensing, but especially acquisitions, there may be additional financing required, which of course, can then come from our strong balance sheet, access to debt capital and access to eventually equity capital as well, certainly in the case of acquisitions. And last but not least, we will continue also to be able to focus on the strategic development of the company going forward and think about the additional indications, for instance, for a compound leniolisib that can be explored towards the future. And of course, our early-stage compounds will continue to be developed. So with that said, I would like to conclude this part of the meeting and go over to the next slide and switch the -- open the floor for questions to everybody who's attending. Thank you very much. Operator, please open the floor for the questions.

Thank you. [Operator Instructions] And our first line comes from Joe Pantginis at H.C. Wainright. Please go ahead. The line open.

Thanks a lot for taking the question. Hope everything is well over there. And my three questions are really focused on, I guess, what you'd call background activities. So for leniolisib, I guess, what can you describe with regard to ongoing pre-launch activities? And do you consider any of those rate-limiting at this point? And the second question is for OTL-105. Do we anticipate any preclinical news from that program over the next 12 months? And then the third question is, how would you describe the maturity of your discussions with regard to potential in-licensing?

Joe, I'll start with the first one, the pre-launch activities. I don't think there's any rate-limiting steps in there. Obviously, pre-launch activities include regulatory activities to prepare the file for submission. But also, not to forget, there is an important element here as well that the market access files for the European markets are in development. That's also very intense. And most importantly, I would say, the patient finding activities, as Anurag was alluding to already, they will be further increased, and that's a logical thing of course as well. As and when you gain more confidence with regards to the approvability of your file, and that is currently the case, we'll start intensifying the patient searching activities both in the U.S. and in Europe. I don't see any rate-limiting steps there at this point in time. So we're going full speed ahead in that respect. With regards to OTL-105, within 12 months, yes, there could be some updates I expect from OTL-105 as milestones, preclinical milestones will be achieved. So yes, I would say, within 12 months, we can actually anticipate some news on that as we progress towards getting into IND-enabling studies, I would say. So watch this space, we will of course update the market as and when there is results. Now with regards to in-licensing acquisition discussions, from time to time, we have indeed conversations with companies that have interesting assets for either in-licensing or acquisitions. At this point in time, some of these things are quite advanced. But of course, as you all know, and Joe, there is no news to you either, but this means nothing until such time that the ink is on paper and that there can be -- a deal can be announced. So we have a very, I would say, efficient business development process developed in the company because we believe it's in a very important spare point of our activities. As you know, we have developed this commercialization apparatus on both sides of the oceans and it is a very valuable asset that we have and a very important key skill set that we have onboard and expertise, and therefore, it can be leveraged. So we consider this as a core competency of our company, and therefore, we put a lot of emphasis on this. And it is very difficult to say, of course, as and when a deal for an in-licensing or an acquisition can be closed. But be sure that we have a lot of attention for it. I hope I answered your question, Joe?

You did. I appreciate the color.

Our next question comes from Hartaj Singh at Oppenheimer & Co. Please go ahead.

Great. Thank you for the questions, and really nice presentation. I have three questions. One is just a couple of follow-up to the previous question by Joe. In terms of planning for the leniolisib launch, Anurag and Sijmen, how is reimbursement going to work out? I mean, are you doing pharmacoeconomic modeling, for example, in cancer, the NCCN guidelines are very important? How will reimbursement preparing for that play into your plans for the launch, both in the United States and Europe? So that's 1. 2, in some of our KOL calls recently, we were told that there is a relative trend to also be at risk for this disease. Are you thinking of potential screening relative to patients in the future going forward to see if you can catch these patients early on? And then lastly, what is the size of the Japan market once or if you were to enter there with a partner?

Perhaps, I shall try first, say something about reimbursement for leniolisib. So yes, we are -- this is of course a very important aspect. We are developing the necessary files in the four months that the various European markets require. We also have of course linked in ICD-10 already in the U.S. for this -- for APDS. And yeah, so we're working basically speaking on all of those fronts. It's an important part of the pre-launch preparations. And if Anurag can add some more color to that, feel free. With regards to screening relatives, I would like to hand over to Anurag on this respect in a moment. The Japanese market, lastly, as we see that -- already see that without any systematic search activities, we found 6-0, 60 patients in France. We therefore have one in a million as our minimum incidence for this disease at the moment. Then you would say that the Japanese market would be at least 125 patients that are there or I think it's 125 million, the population of Japan. But again, one in a million is our minimum incidence rate that we think without systematic searching. And I'd hand over to Anurag. Maybe you could say something about the screening or any of the other things to give more color. Anurag?

So absolutely, Hartaj. The family testing is a big part of our search efforts. In fact, the program, the navigateAPDS genetic testing program, no cost program, includes the provision for family testing. So if a patient is identified, their family members are able to get tested also for no charge. We are also doing a lot of education around this front in terms of family testing. So that is currently and will continue to be a big part of the search effort for APDS patients.

[Operator Instructions] And our next question comes from Christian Glennie at Stifel. Please go ahead.

Good afternoon, gentlemen. Thanks for taking the questions. First one on RUCONEST, please. Just wondering if you can talk a little bit more about this impact of tighter inventories in the U.S., whether that's a transitionary thing or whether that's something a bit more long-term in the sense that what might sales growth have been if there wasn't this sort of correction in the market? And would you expect a bit more normalization of buying in inventory levels through the rest of the year or was this a shift?

Yeah, that's always a difficult one, Christian, because inventory levels are part of the game, I suppose. So one quarter you have a little bit high inventory and the other part -- and the other you have a bit lower inventories. But we noticed that this time there was a decrease in inventories because we obviously keep very good track of it because it's only a few of these specialist pharmacies that we're dealing with here. And this -- I don't think there's any sort of systematic thing here, but it was noticeable here that it was lower. Hence, we basically reported it as we should be of course. So there's nothing behind that. As I was saying, we still are confident about the RUCONEST business because we see an increasing number of patients and an increasing number of physicians prescribing it. We see the necessity and everybody seems to be getting to see this necessity that it is good to have a C1 inhibitor onboard as breakthrough therapy when you block the bradykinin kallikrein in them, X axis by means of your prophylaxis, which was of course, a very long-term thing when people have to switch from C1 inhibition and bradykinin kallikrein inhibitious breakthrough to the other way around. That takes a while. That's a slow process, but it continues to go forward as we were predicting, I would say, back in the days, and as we see now developing in the market. I think that's all I can say about this at the moment, Christian.

Turning to leniolisib then, couple of things. Firstly on the patients identified and some of the numbers there. I think you said now 400, previously, that was at 350, but I can't remember whether that was the start of the year, whether you're sort of -- you added about 50 patients in the quarter or something like that. Is that about right? And then that implies about 30% -- you found about 30% of the patients in the U.S. and Europe. I mean, how high do you think the diagnosis rate could go here?

Well, as I was saying before, we are already quite confident about the fact that we could see 1% of the population having this disease. With further intensification of the activities in the market, i.e., we will be sending more people, more colleagues into the market to actually start going to these immunology clinics and trying to find these patients that are already being treated, but that are not diagnosed. So in other words, we expect of course that this growth will at least continue or maybe further accelerate. But we're certainly going to intensify further the activities because we have of course gained more confidence over the last months in leniolisib being an approvable product. And that goes on both sides of the ocean. I would say, it's happening in the U.S. and it's happening in Europe as well. Although in Europe, as we know, slightly different organized. Obtaining genetic testing is a little bit easier and often reimbursed. But there again, we're working with the specialist centers of excellence of these immune -- primary immune deficiencies towards analyzing these patients and their families, of course, that's an important aspect as well. I hope I answered your question?

And then I just wondered if you had yet done any survey work or market research around the 400 or so patients that you managed to identify and their physicians, I guess, their doctors. What percentage of those would indicate that they would prescribe leniolisib sort of standard survey work you might do?

No, there is -- if Anurag has something to add, obviously he can, but I'll try to answer this first. One of the things is of course the patients that are eligible for treatment are currently to 12, if the product gets approved from the current douche, of course, there is 12 years and older. So we will have to -- for the pediatric study, we have to wait for the periodic studies of course for the pediatric population. That's one thing of course. But as far as I know and see from patient narratives and so on, patients that are eligible for treatment are all very interested in getting the treatment as are the doctors because there's simply nothing there. And Anurag can put more color on it because he's been sort of visiting these conferences where, amongst others, the data was presented and he picked up a lot more on that background. Maybe you can give some color there, Anurag, to what you think about the willingness to prescribe interest in the treatment?

Absolutely. The data has been well received so far from when we presented it actually in our conferences, both in the U.S. as well as in Europe. And the feedback that we're getting from physicians has been quite positive that these data are impressive, including some of the long-term data that I showed today, especially the ability for these patients to potentially be able to stop IG replacement therapy. This is something that was viewed quite positively by the immunology community. So I think the -- when they see these data and they see their patients, the feedback that we're getting is again this -- if leniolisib was available, this would be something they would certainly consider for these patients.

And then if I can, just finally on the regulatory side with leniolisib. Is it possible to say at this stage whether you might expect an advisory committee as part of the review process? And then, is it your understanding that this indication and leniolisib and the approval would be applicable or appropriate for a priority review voucher? And if so, is that a voucher that would be in Pharming's hands or in Novartis' hands or rights to have priority review voucher?

Maybe I can hand over to Anurag first for the regulatory question.

So in terms of the advisory committee, this is -- we're just beginning the process in terms of -- we haven't actually filed yet, so FDA will notify us after they review the application whether they determine whether advisory committee is necessary. So we'll leave that in FDA's capable hands. Of course, we're preparing in case that an advisory committee is needed, we would be ready for that. But this was really FDA's decision based on their review of the data, and they haven't received the file yet. So they don't have any determination on that yet. And then I think, Sijmen, you wanted to make a comment about the priority review voucher.

Christian, we do think that we will be qualifying for that. And in case such a priority voucher will be granted, then obviously, that is in -- I think, let me think about the contract precisely, that will be in the hands of Novartis. But we have agreed a certain split of the value of such voucher between Novartis and us commensurate to I think the investment in the compound as and when the compound gets approved. So yes, it is there. And yes, there is some value in it for Pharming, but it's an undisclosed amount as you may appreciate.

[Operator Instructions] And our next question comes from Simon Scholes at First Berlin Equity. Please go ahead.

Yes, hello. Thanks for taking my questions. I've just got one. I was just wondering when we might get the next piece of news flow on the Pompe program?

That's a good question, Simon. I would say that later on in the year, we will definitely. But it will be more towards the end of the year, we will definitely give some more updates on the Pompe program. But again, it is not one of the main value drivers, as you could appreciate, because it's in preclinical, right? That's -- and in this comp of course, that's why.

Perfect. Thank you so much for answering questions. At this time, there are no further questions. And now I would like to pass it back over to Sijmen for any final remarks.

Thank you very much, Victoria. Yes, ladies and gentlemen, thanks for attending this. As you have seen, we delivered on our -- on the first part of the single-digit growth expectations that we have for 2021. We also have informed you and are executing on increasing the investments ahead of the launch of leniolisib, which of course, will transform our company significantly towards a multiple product company with multiple markets where we get our revenues from. So we significantly derisk our company going forward. You all saw also that we are very much hunting for additional late-stage assets because we have the balance sheet to do this and we have access to debt capital, and eventually, in the case of acquisitions even for equity capital as well. And last but not least, it's very important to note here that executing on our plans on the current portfolio does not require additional financing that we can see. So with that said, I would like to thank you for your attention. And I would like to look forward to updating you again on the progress of the company as and when we have our first half results, which will be in the first week of August, if I remember well. Thank you very much, and good bye.