What is going on at Pharming, which caused the stock price on the Amsterdam Midkap to rise by as much as 50 percent in the past month? For a year, a share in the biopharmaceutical company from Leiden did not cost much more than 80 cents, but suddenly the value rose to 1.25 euros.
The trend started after the presentation of the results for the first half of the year. Revenue came in at $96.8 million, up about 4 percent from last year, and net profit was just over $19.2 million. Excellent results, but also not very startling, according to analysts.
So far, Pharming makes his money mainly in the United States, selling ruconest. This is a medicine for a rare and life-threatening hereditary condition in which patients suddenly develop swelling in the body. The production technology is unique: the active ingredient in ruconest is extracted from rabbit milk.
But now Pharming has a second iron in the fire: leniolisib, a drug against a rare disorder of the immune system. In presenting its half-year results, Pharming reported that it is on track with its application for approval by the US drug agency FDA and the European EMA. If all goes well, the drug could be sold in the US and Europe by 2023, Pharming promised.
Expansion of the range
The expansion of the range is of great importance for the future of Pharming, because with the drug ruconest it is entering a very competitive market. ruconest is an ‘acute’ drug: patients take it when they have a seizure. Other drugs on the market have a ‘prophylactic’ effect: patients take a drug on a daily basis to prevent attacks.
“The market for acute treatment is shrinking compared to that for prophylactic treatment,” says Jacob Mekhael, an analyst at investment bank Kempen. The ratio of acute versus prophylactic treatment among patients was 60 versus 40 percent about five years ago. Those percentages have now been reversed. “The shift towards the use of preventatives continues,” says Mekhael. According to him, this will inevitably lead to a decrease in ruconest sales in the coming years. He has therefore set his current price target at 0.60 euros.
Analyst Christian Glennie, of investment bank Stifel, is more optimistic about the future of ruconest. “There will always be a patient group that prefers acute medication, not everyone wants to take medication on a daily basis.” Moreover, the effectiveness of preventive agents is never 100 percent. “Patients can have so-called breakthrough attacks. At that time, they still need acute medication.”
There is also the point of convenience. Competing companies are developing acute medication in tablet form, while ruconest has to be injected. Also on that point, according to skeptics, ruconest would lose. Glennie disagrees: “Injecting a drug simply works the fastest. Moreover, these people have been used to administering medication in this way all their lives.”
According to Pharming, sales of leniolisib could be as big as or even bigger than ruconest, Glennie says. “In that case, Pharming’s turnover would therefore double.” That will of course take a number of years, but he has already included that promise in the calculation of his price target, which now stands at 1.66 euros.
A version of this article also appeared in the newspaper of September 5, 2022