Pharming: Creating New Generation Plasma-Free Medicines For Unmet Medical Needs
Aug. 14, 2019 10:41 AM ET | About: Pharming Group N.V. (PHGUF)
Pharming's Q2/19 results beat expectations for a second quarter in a row. Turnover is confirming that earlier perceived advantages for competition in the HAE marketplace were misguided.
Huge expansion potential for rhC1INH beyond HAE around the Ruconest franchise through its pipeline opportunities with pre-eclampsia, acute kidney injury, and ex-Ruconest investments in Pompe and Fabry diseases.
Since the successful buyback of US distribution rights from Valeant, Pharming has built a highly sophisticated rare disease sales organization across the US.
The company is now poised to add new products to its portfolio through acquisitions and license agreements, which would boost its revenues significantly.
Manufacturing investments are underway to meet the bullish outlook. A second production facility is awaiting regulatory validation in Q1/20 and will more than double existing capacity.
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Pharming (OTCPK:PHGUF) - is a Dutch, Leiden-based company listed on Euronext Amsterdam under the ticker 'PHARM':
Pharming is specialty pharmaceutical company developing innovative products for the safe, effective treatment of rare diseases and unmet medical needs. Pharming’s lead product, Ruconest ® is a recombinant human C1 esterase inhibitor approved for the treatment of acute HAE attacks in patients in Europe, the US, Israel, Colombia and South Korea. The product is available on a named-patient basis in other territories where it has not yet obtained marketing authorization.
Pharming’s technology platform includes a unique, GMP-compliant, validated process for the production of pure recombinant human proteins that has proven capable of producing industrial quantities of high quality recombinant human proteins in a more economical and less immunogenetic way compared with current cell-line or plasma fractionation-based methods.
Source: Pharming Group N.V.; Website
Pharming has been around for some time, and experienced quite a bumpy ride during its long existence. Back in the 90s, the company made worldwide news with the breeding of Herman the Bull, the very first transgenic bovine. Facing public scrutiny over its then novel and controversial genetic engineering, it wasn't until 2010 and a few near bankruptcies later that its first commercial product Ruconest for acute HAE attacks was approved by the European Medicine Agency (EMA). In July 2014, the FDA also approved the medicine.
Today, Pharming uses rabbits as a source to produce Recombinant human proteins. Produced in the milk of transgenic rabbits it offers several advantages over traditional methods of harvesting human proteins from human blood.
Recombinant proteins carry a much lower risk of disease transmission due to their method of production than plasma-derived proteins do. In addition, as the expression goes ‘breeding like rabbits’, the production capacity is sheer limitless!
Today, Pharming is generating positive cash flow, forecasting increased quarterly revenues and finds itself in a position where it can finance - and has already started to develop - new medicines for unmet medical needs.
Pharming's first choice of medicine to develop was a so-called "orphan drug," due to the pricing model for such medicines: Extremely high-priced, compensating for the fact that a rare disease affects a very small percentage of the world's population. However, these same Human recombinant proteins can also be used to treat other diseases that result from a patient's own inability to naturally produce some essential proteins. Diseases with much broader patient populations that currently have unmet medical needs. A recipe for blockbuster market potential!
HAE Market Dynamics
The HAE marketplace is very dynamic, and Pharming faced a setback in 2018, receiving an FDA response letter, requiring additional clinical data for approval of their leading product Ruconest in the application of prophylaxis treatment of HAE patients.
Shortly thereafter, Pharming’s biggest competitor Takeda (NYSE:TAK) (formerly Shire), market leader in the production of medicines for HAE, got FDA approval for a new, non-plasma based prophylaxis HAE medicine branded Takhyzro (formerly called Lanamedub). This medicine is produced in Chinese hamster ovary (CHO) cells by recombinant DNA. A smart move, for its other, plasma-based HAE prophylaxis medicine called Cinryze, is becoming increasingly challenging and expensive to produce. As all this was happening, another competitor, BioCryst (BCRX) is developing a promising oral drug, also for prophylaxis treatment with the prospect of offering a more convenient way of drug-administration to HAE patients.
Many voices could be heard saying that the introduction of Takhyzro and BioCryst's new pill would mean the end of a significant market for acute HAE treatments, and that Pharming's business case for its acute HAE medicine would collapse after losing the prospect of entering the prophylactic market on a short term.
Now, one year on, the surfacing data on these competitor’s medicines are painting a very different picture.
Takeda’s new medicine Takhyzro, although quite well received, is not as effective as the company projected, and Ruconest is now profiting from a higher than expected breakthrough rate of HAE attacks of patients who are on its new prophylaxis treatment. This is opening up a whole new market for Pharming’s medicine, as the go-to medicine for HAE breakthrough attacks; an opportunity that was not anticipated. Reportedly, HAE breakthrough attacks may reach as high as 50% to 60%!
And as for the oral drug developed by BioCryst, the Phase III clinical trial data endpoints released earlier this year are so poor, that the company lost more than half of its market value overnight (from $7.39 down to $3.49 on publication date 21st May '19). Although effective to a certain extent, the question remains if the FDA will approve the drug in an environment where much better working medicines are already available. And in the event it would be approved, reality shows that the introduction of such a weak prophylaxis treatment could actually increase Pharming's sales potential for breakthrough attacks!
As patients and physicians appear to increasingly seek out Ruconest as the most effective acute treatment for HAE attacks, there is a consistent growth in the number of patients in the US. A recently published independent study in Germany shows that Pharming’s medicine Ruconest is consistently best in class. This while the market may have expected it to go downhill after the introduction of the prophylactic agent of Takeda.
In sharp contrast to those expectations, Takeda's medicine for acute HAE attacks - Firazyr - (Ruconest's main competition) has suffered a major decline of more than 60% (page 9 of Takeda Q1/19 report published on 31st of July) over the last couple of months.