Pharming Group N.V. (PHARM) Earnings Call Transcript & Summary

Ladies and gentlemen, on behalf of the Chairman of the Board of Directors, I welcome you to this Annual General Meeting of Shareholders of Pharming Group N.V. We have currently technical disruption with our Chairman, Paul Sekhri, but we hope we can solve the problem in a couple of minutes. During that time, I will -- we'll start with the meeting on his behalf. We had to decide once again to switch to the digital setup as the COVID-19 pandemic is still ongoing. As a result, you are following this meeting through a live webcast. Thank you all for your understanding. To respect the number of people that are attending, only our nonexecutives, myself, Aad de Winter; and our CEO, Sijmen de Vries; and our CFO, Jeroen Wakkerman, are in this meeting room together with our civil law notary and our Company Secretary. All other members of the Board of Directors are participating in this meeting using remote facilities. Also Mrs. Buitendijk, partner at our external auditors, Deloitte, is attending online. At today's meeting, we will have to say goodbye to our nonexecutive, Barrie Ward, and myself. We have reached the end of our tenure and are not eligible for reappointment due to the restrictions imposed by the Dutch Corporate Governance Code. As mentioned during our EGM in December, Juergen Ernst retired on November 23 last year. We have the pleasure to welcome today Ms. Jabine van der Meijs, Mr. Steven Baert and Leonard -- Mr. Leonard Kruimer, who are proposed to -- for appointment as our new nonexecutive board members. Jabine, Steven and Leonard are also online to follow this meeting. They will introduce themselves later on. Today, Bruno Giannetti's tenor as Chief Medical Officer will also end. I would like to seize this opportunity to thank Barry and myself and Bruno, on behalf of the entire Board of Directors, for their very high commitment and dedication to Pharming over the years. I'm happy to say about myself. Ladies and gentlemen, this meeting was convened by means of notice to convene that was published on 6th April 2021 by way of an announcement on Pharming's website and press release. The agenda and all meeting documents were published at the same moment. Therefore, this meeting was convened in accordance with applicable statutory requirements. As a result, valid and binding resolutions can be adopted today on all voting items on the agenda. Please note that in accordance with Dutch law, resolutions will also be valid if there would be any technical disruption, as is currently the case during this meeting. But of course, we will do everything in our power to avoid that. A total number of 1,106 shareholders and 64,574,841 shares is represented today and is entitled to vote on all items on the agenda. All the shareholders have issued a proxy with voting instructions either online to the company or to the civil notary, Mr. Van der Bijl of NautaDutilh. The procedure for asking questions during today's meeting will be similar to the procedure during our general meeting In May and December. This means that you were invited in the notice to convene to send us, by e-mail, your questions on the agenda items. Those shareholders who sent us their questions by e-mail will be able to ask clarifying questions during the meeting. But today, there's also a limited possibility for other shareholders to ask questions related to the items on the agenda. [Operator Instructions] For practical reasons, I will coordinate the answering of those questions that will be received in the studio that is used to host this meeting. At the end of the meeting and any other business, we will give you a few minutes to submit your remaining questions on the agenda items. At that moment, we also address the questions of a more general nature that are in scope for this meeting. With the view to orderly conduct of the meeting, the question that we received by e-mail will be answered first. Thereafter, follow-up questions from the shareholders will be addressed. All the questions raised during this meeting will be answered to the extent time permits. Please note that this means it may not be possible to answer today all those questions that were not sent by e-mail. To answer (sic) [ the answer ] to all questions raised on the items on the agenda, including those questions that cannot be addressed during the meeting, will be published on the company's website in the coming days. The full audio recording will be made of this meeting to facilitate the minutes of this meeting. The minutes will be made by Ruud Van Outersterp, our Company Secretary, within 3 months as well will be published on our website. Ladies and gentlemen, I'd now like to move on to the second agenda item, the annual report for the financial year 2020. This agenda item includes several sub items. I invite our CEO, Sijmen de Vries, together with the CFO, Jeroen Wakkerman, to elaborate, first of all, on the business, the operations and results for the year ending December 31, 2020.

Thank you very much, Aad. I'm happy to do that. And before I do that, of course, I would like to draw your attention to this slide that talks about forward-looking statements. as we will be making some forward-looking statements in these presentations that are based upon our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, our development plans, clinical results and other future conditions. Please take a moment to read this slide. And then I would like to go on with the operational highlights from 2020. 2020 was a remarkable year in many aspects for the company. First, of course, in the beginning of the year, we saw something happening that had never happened before. And also for the regulators, EMA and FDA, this was a unique moment because they never approved an upscaled facility for transgenic animals dealing with rabbits. That was, of course, a very important milestone that the company achieved showing once more that we have a very scalable and economic platform at our disposal by which we can produce C1, recombinant C1 esterase inhibitor, also known as RUCONEST brand name. We were also promoted to the Mid-Cap Index of the Amsterdam Stock Exchange. That means top 50 Dutch public companies, important milestone. We also received the European Commission approval to treat the acute hereditary angioedema attacks in children with RUCONEST in the European Union. And we received the European Commission's orphan drug designation for leniolisib for the treatment of APDS. The product already had a U.S. orphan drug designation that was already received by Novartis prior to licensing the product to us. We then saw results from a compassionate use study in patients with confirmed COVID-19 infections hospitalized with severe related pneumonia that were treated with RUCONEST. And those -- those results were also published in a peer-reviewed journal later on in the year. Subsequently, 2 studies into the use of RUCONEST in the prevention of those severe complications of COVID-19 were initiated. One in Switzerland, which branched out later on to Brazil and Mexico, investigators initiated; and one according to our own IND in the U.S. And lastly, towards the end of the year, we successfully completed our secondary listing on the Nasdaq Global Market that was in 20 -- in December '20. Then into 2021, You saw the launch of a genetic testing program, navigateAPDS in collaboration with Invitae Corporation to improve genetic testing for activated PI3 kinase delta syndrome, APDS, I will call it from now on. And we announced the intention to nominate 3 nonexecutive Directors, Steven Baert, Leonard Kruimer and Jabine van der Meijs to our Board of Directors. And recently, we initiated the enrollment of the first patient in our multicenter Phase IIb study for the -- with RUCONEST for the prevention of acute kidney injury after myocardial infarction. That study, of course, had been significantly delayed because of COVID-19. This is a moment to actually talk about our long-term sustainable revenue growth strategy. And I would like to present to you the 3-pillar strategy for growth that we have formulated during 2020 and which we continue to work against. First and foremost, on the left-hand side. You see there the continuing growth of RUCONEST sales through further country launches and increasing HAE market share. So we are working on fully commercializing RUCONEST, of course, in all international markets. And we look forward in 2,000 -- and we've done preparations in 2020 and look forward in 2021 to roll out RUCONEST in further markets that hasn't got RUCONEST available yet. We're also working on improving the convenience of therapy for HAE patients with RUCONEST. And last but not least, we're looking very intensively to find new technologies to treat or cure HAE. This is an intent that the company has formulated. And this will mean that this is the only thing where we will be looking for early-stage in-licensing of technologies to leapfrog what is currently being offered or in development for hereditary angioedema. So in the long term, we can also offer additional products beside RUCONEST for the treatment of HAE or the prevention of HAE, which is our home turf, of course, since last 2 decades. In the middle, you then see the expanding indication for the C1 inhibitor franchise and developing new recombinant proteins using our platform technology. This means, of course, that we are developing, and we set out to develop already RUCONEST -- or sorry, the recombinant C1 esterase inhibitor for additional large unmet medical needs, and that we are working to create new difficult to express proteins using our transgenic platform. Then on the right-hand side, and of course, because this is earlier stage than desired, of course, and there is a significant gap in our pipeline, we have also formulated the growth strategy for the nearer years. And that is, of course, on the right-hand side, the in-licensing and acquisition of late-stage clinical development candidates. leniolisib for the treatment of APDS is an excellent example of that. That product was in license from Novartis about 1.5 years ago. And the company did not get access to that product because we paid $20 million down payments. There were 9 other companies who are happy to pay such down payment to Novartis. But we were selected because we have proven commercialization capabilities in rare and ultra-rare diseases. And that's, of course, very important when a company looks to find a partner to commercialize their product. This means that we are looking, and we're looking very intensively, via an organized business development process into acquisition or in-licensing of such assets that can be launched within, let's say, 3 years from now and that we can actually accelerate the growth in the nearer term as well. Of course, leniolisib is a very good example of that. And leniolisib is now well coming to the end of its development, and we hope to be able to launch that towards the end of next year. So this is our 3-pillar growth strategy. Let's look at the HAE franchise. We saw a significant increase in revenues during 2020 despite the impact of COVID-19, which also hit us like the rest of the industry in Q2 2020 rather hard. But we saw a strong recovery during the remainder of the year, and still managed to grow the U.S. revenues to more than EUR 177 million. That triggered the final payment -- the final payment of the milestone of $25 million to Bausch Healthcare (sic) [ Bausch Health ], which was part of the agreement under which we got the rights back in December 2016 from Bausch Healthcare (sic) [ Bausch Health ]. Also, revenues in Europe and the rest of the world increased to EUR 8.3 million also driven mainly by the increased demand in Q3 and Q4 because also in Q2, the European organization was hit by the COVID standstill, as was the rest of the pharmaceutical industry. This, of course, is because we acquired the rights back from Sobi at the beginning of 2020 and now are working to make RUCONEST available more intensely in the markets where it was already, and beyond that by launching it in other markets that don't have RUCONEST yet. Recently, we, of course, had our Q1 results of 2021. And unfortunately, we weren't all ready for that during Q4 2020 and into 2021. There was another huge surge of COVID-19. And that had another -- that led to another reduction in sales, more or less similar to what we saw last year. And we talked about that extensively in the results last week. But we saw, importantly enough, no major shifts in volume and market shares between RUCONEST and competitors. And we expect, as we said last week, that we returned to growth in Q2 2021 and beyond. So how's RUCONEST doing in that changing HAE landscape? We get a lot of questions, of course, about that because there's -- it's quite a competitive landscape. And we see, generally speaking, and we're talking mainly about the U.S. market here because that is the main source of the business in hereditary angioedema, not only for us, but for our competitors as well. We see an increasing trend towards prophylaxis. Although we also see that, that trend seems to be saturating at this point in time and flattening. And that's good news for patients that there's new prophylactic treatments because they offer better attack reduction rates than previous IV plasma-derived C1 inhibitor prophylaxis treatments. But what we also see is that there's still a significant amount of breakthrough attacks. Under the old prophylactic regimens, a significant amount of patients or almost all patients had regular basis breakthrough attacks. Now that, of course, is reduced, but still approximately half of the patients using those new prophylactic treatments suffer from breakthrough attacks. Some frequently, some less frequently, and therefore, are in need of breakthrough medication. And with the change of new -- towards the new products coming to the market and the market leader, a long-acting monoclonal antibody that's blocking the kallikrein and bradykinin inhibition that calls for treatment of uncontrolled breakthrough attacks with C1 inhibitor. And that is where RUCONEST, of course, can play a role where it couldn't play a role previously. So we see a gradual change in the population of RUCONEST that we're treating. Traditionally, almost all our business was with patients that were very severely affected by the disease, and we're having a lot of attacks because that's where we came. When we came in late into the market, that's, of course, the first [ prose ] -- the first patients you get, patients that can't get by on existing therapies. Now we see a gradual change. And we see also patients that are using a lot less of our product and using it for breakthrough attacks that were not there before. So in other words, we continue to treat a bigger part of the population of patients. But the changing -- the treatment patterns are also changing that respect. So we see, we expect to go forward that the shift to prophylactic treatments, including such treatments as the new oral product that came on the market, will continue to need many adequate medications such as RUCONEST for the treatment of breakthrough attacks associated with these prophylactic products. In other words, we believe that RUCONEST has a place in the market, has a place in the market that continues to be there and we see prospects for further growth in RUCONEST in the hereditary angioedema market. We're also investing significantly in the derisking and upscaling of our production capacity. As I already stated before, we received the approval for both EMA and FDA for the second production facility. And the construction of the third facility started in 2020 and is almost ready by now. Plans for a larger force facility to manufacture other pipeline products are also in the planning stage. And we recently announced the building of our own downstream processing facilities. That is the purification of our product, the second step of the manufacturing and the most expensive step of our manufacturing to be able to do that in-house rather than outsourced at this point in time or in combination of outsourcing at this point in time. That's a big project that's happening in Pivot Park in the city of Oss in the Netherlands. And we expect construction to start in the second part of this year of that facility. Patient numbers and new potential new indications are much larger than hereditary angioedema, like preeclampsia and acute kidney injury. Therefore, we have -- we started to redevelop C1 inhibitor from cattle to meet the demand for future large indications. And that project is moving well along as planned. And all this is -- can be funded from the current cash generation of our business. So with regards to the expansion of the C1 inhibitor for larger indications, as I was stating before, we're very glad that we could announce a couple of weeks ago that finally, the Phase IIb clinical trial for acute kidney injury could start again -- could start in effect as the pressure on the health care system in Basel has significantly reduced and was able to start clinical trials again. This is a double-blind, randomized, controlled study in up to 220 patients that have suffered a myocardial infarction. This study will take some time, of course, but we do expect that the results could be expected in the second half of next year, normally. Ongoing trials for RUCONEST at this point in time, in University of Hospital Basel as well for up to 150 patients in this randomized controlled -- investigator-initiated study to investigate the severe complications of COVID-19 are still ongoing. This is an adaptive design. So it means that during such a study, analysis can be made and results can be drawn. The same goes for the study that we are at under our own IND in the United States in The Valley Hospital in Richmond, New Jersey. We will include up to 120 patients in a slightly different treatment regimen in New Jersey, the patients are treated for a longer time with a lower dose. And in Switzerland, Mexico and Brazil, they are treated in a higher dose for a shorter duration of time. So at the end, we can draw conclusions, hopefully and formulate next steps with regards to this development program. Unfortunately, the trial for C1 inhibitor in preeclampsia is still halted due to COVID-19 pressures on the respective centers. Let's then talk a little bit about the third pillar of growth and where leniolisib is the first representation. First about APDS. APDS is so-called primary immune deficiency. That means, in other words, that there's an immune deficiency where we do not know the cause. That is not a rare -- in and of itself, these are not rare. These primary immune deficiency represent about 1 in 12 from the people in the general population. And this is a population that is invariably treated by immunologists symptomatically, unfortunately. And for most of them, there's only one way, that is downhill, unless a specific therapy can be found to their specific gene mutation. And we already discovered 400 of these specific mutations. And there is a greater understanding of these PIDs and revealing as a larger and larger patient population. APDS is obviously one of those specific mutations. APDS is a recent disease. It was recently discovered only in 2013 and is caused by one of these variations in 1 or 2 genes were leading to APDS 1 or 2. And both of them result in the hyperactivation of this enzyme, phosphoinositide 3-kinase delta, PI3-kinase delta, which suppresses and disregulates the immune system such that these patients do not have a functioning immune system. More specifically, the B cell compartment of their immune system doesn't function well, and that means they are susceptible to continuous infections and all the organ damage that this continuous infections cause. So it is very important to balance that PI3-kinase delta signaling for -- to have a normal immune function and make these people able to return to normal life. As we said, it's expected to be an ultra-rare disease. A lot more rare than hereditary angioedema, about 1.5 per million of population in total. However, we found in some screening, we found quite higher rates within that primary immune deficiency group. And one of the most important things why we in-licensed this product, there is a genetic test that is commercially available. So once you identify these patients, you have 100% diagnosis, and you can give them personalized medicine. And that is badly needed because on the right-hand side of this picture, you see that these patients are very often misdiagnosed. And they are misdiagnosed for a very long period of time and suffer for a very long period of time. We now have a potential to address that unmet medical need in APDS with leniolisib. As we stated before, there's an estimated about 1,350 patients if you take the 1.5 per million patients. They are across all global regions. And they spent, like I said before, years undiagnosed or misdiagnosed and being treated by a multiple number of doctors. And it begins in childhood and disrupts school and social development and the general development of these children. And it has a significant impact on their quality of life. And as you can see on the bottom, there's severe infections that cause damage to the lungs, severe gastrointestinal disease so that they do not grow and develop themselves normally. Smaller organs, autoimmune diseases and finally, more than 60% of these patients die from fatal lymphoma. So very sad to see is where there's no cure for, only symptomatic treatment. So lots of antibiotics. Lots of immunoglobulin -- very uncomfortable immunoglobulin replacement therapy infusions. MTOR inhibitors that have -- are not very friendly products that can only suppress lymphoproliferative syndromes. And a hematopoietic stem cell transplantation, which is also a quite a threatening prospect. But we have product in development now that could actually help those patients. And by balancing the PI3-kinase delta, we believe that leniolisib can help these patients live a normal life. We have already seen precision biomarker responses that we do have an impact on the route case. We have seen patients already in clinical trials with good results and continuing to use the product under extension of the clinical trials. We are coming towards the end of the final clinical trial, the Phase III clinical trial. We expect results from that towards the end of this year. And we are aiming, by means of an expected accelerated review, for instance, by the FDA, that we could get the product approved by the end of 2022. And last but not least, we have the commercially available genetic tests so we can identify these patients and offer them the tailor-made and personalized treatment that they need. And that is, of course, an important initiative. I mentioned it already before, we've been preparing this for quite a long time, and we were able, at the beginning of this year, to launch this program, navigateAPDS, a collaboration with Invitae, a big diagnostic company that will help those immunologists to identify these patients. Remember, these patients are already treated by immunologists, So we just have to basically formulate most typical symptoms by which these patients can be identified by means of AI algorithms or database searches and then they can be offered to the test. And we offer free testing for those patients that immunologists suspect that could have APDS, and therefore, we could establish whether they have APDS or not. And in the future, whether they can actually benefit from leniolisib as and when it becomes available. So leniolisib, we think, is in a very important value proposition for the future growth of our company. It is a significant PI3-kinase inhibitor, well-tolerated safety profile. It's an oral product for the ease of use. It normalizes the biomarkers, illustrating the clinical effectiveness. It targets the root cause of this disease. There is a commercially available genetic test, which is very important, of course, when you look for these ultra-rare patients. Remember the patients are already being treated by immunologists. And it has a potential to improve their quality of life and treat this -- and reduce their treatment burden significantly. So in other words, APDS is currently a progressive disease that can lead to organ damage, malignancy and early mortality, and we hope to make a big change in that once leniolisib becomes approved. This was what I wanted to share with you about our growth strategy. I think it's now time to switch gears and go to the financial review of 2020. And I would like to hand over to my colleague, Jeroen, our CFO. Jeroen?

Yes. Thank you very much, Sijmen. I will take you through the financial highlights 2020 and then through the financial statements. In 2020, we had a record revenue, which increased by 9.9% to EUR 185.7 million. And that was underpinned by record sales in Q4 we sold for EUR 51 million, and that was a growth of 10.6%. Gross profits also increased by 11%, 11.8%. So the gross margin improved. And the operating profit increased by 10.7% to EUR 66.7 million. Net profit decreased though. They decreased by 9.8% to EUR 33 million. And that mainly reflects the negative currency effects of EUR 12.6 million on the cash that we keep in dollars. As a reference, the year-end euro-dollar rate was 1.12 in '19. And a year later, 2020, it was almost 1.23. So that tells you that the euro-dollar went up and therefore, the dollar went down. We strengthened the cash position to EUR 167.1 million from EUR 66.3 million the year before. And that was driven by several effects but the key ones were the operational cash flow and the issue of a bond. And the bond is a senior unsecured convertible bonds. It is due in 2025. It has a 3% coupon and the nominal value is EUR 125 million. We issued that and the proceeds were used to redeem the remaining loan with OrbiMed Advisers. That was at an interest rate of 11%. So we created a big saving on the interest cost from about EUR 11 million per annum to EUR 4 million per annum, so a reduction in interest cost of about EUR 7 million. The balance of the proceeds will be used to support the expansion of the commercialization and manufacturing infrastructure that Sijmen just alluded to and the launch of leniolisib and potential acquisitions and in-licensing opportunities. Then going to the financial statements to start off with the income statement up until the operating results. Here again, the revenue growth is depicted a growth of 9.9% and a split in U.S.A. of EUR 177.4 million and in EU and the rest of the world of EUR 8.3 million. The gross profit went down in absolute terms, and that was mainly because of production efficiencies. And the gross profit increased from EUR 147.7 million to EUR 165.1 million, which means a gross margin improvement from 87% to 89%. The other income line shows the grounds that we receive mainly for R&D activities. And you also see that the operating costs went up by almost about EUR 12.8 million. R&D costs increased because of -- well, basically R&D for both new and existing products. The general administrative cost increased because of the -- well, basically to support the growth of the company. And the marketing and sales cost increased because of increased sales activities, mainly in the U.S. So the operating profit went from EUR 60.9 million in 2019 to EUR 66.7 million in 2020. Then the income statement from operating profit to the net result, the profit for the year. And what is shown here is the effect of the finance cost last year. They went up -- the net finance cost went up from EUR 14.5 million to EUR 28.5 million. And that was mainly driven by foreign exchange. And the key elements of those net finance costs, maybe good to mention them, is foreign exchange effects in total, EUR 16.8 million; interest costs, EUR 4.2 million, which was EUR 11.3 million the year before; the settlement of the old OrbiMed loan came with a cost of EUR 3.8 million, and that was booked in the finance cost; and the cost of a Bausch milestone payment was EUR 3.3 million. So those are the big elements of those net finance costs. Profit before tax, EUR 38.6 million versus EUR 46.7 million the year before. And net profit -- the profit for the year went from EUR 36.2 million to EUR 33 million in 2020. EPS, basic earnings per share, went from EUR 0.058 per share to EUR 0.051 per share. We go to the balance sheet, noting the key changes in the balance sheet. The intangible assets increased mainly because of the acquisition of the commercial rights in Europe from Sobi. The investment there was EUR 7.5 million. The investments in PPE, property, plant and equipment, in several facilities, caused the increase in -- from EUR 8.6 million to almost EUR 10 million. The right of use of assets is related to lease of buildings and cars, so that's basically operationally related costs. And the investments accounted for using the equity method that reflects our share in BioConnection, which is a partner in our production process. Then looking at the current assets. The inventories went up slightly, mainly because of intermediate stock in drug substance. Trade and other receivables went up mainly because of U.S. tax receivables. And the cash and cash equivalents increased as I've just alluded to. Then going to the liabilities of the side of the balance sheet. The shareholders' equity increased and that was mainly because of profit for the year that I've just shown and share-based compensation. So it went from EUR 104.7 million to EUR 149.4 million. You see the convertible bonds of EUR 121.9 million. The -- in the current liabilities, you see the convertible bonds amount as well, and that is the accrued interest. The loans and borrowings is 0 in 2020 and the amount from last year was the loan from OrbiMed that was repaid. And in other financial liabilities, the EUR 20 million, that relates to the liability to Bausch for the last milestone payments that we had to pay, and that was EUR 25 million and is paid by now. Then going to the cash flow. Profit before tax, EUR 38.6 million, as I've just shown. The net cash flow generated from operating activities came to EUR 73.9 million, and that was an increase because the year before in 2019, it was EUR 66.5 million. The net cash flow used in investing activities was EUR 13.7 million. Again, you see the investment in intangible assets that was the Sobi transaction. And the acquisition of the license, the EUR 1.4 million that you see in this table, is related to the license for leniolisib that we pay to Novartis. The net cash flow generated from finance activities, EUR 53.1 million. There was a lot going on in this area. The repayment, obviously, of the OrbiMed loan, the EUR 50.1 million on top. The payment on the contingent consideration. Again, the -- that's the milestone payment to Bausch. The proceeds of the convertible bonds and the transaction costs related to it, the EUR 2.3 million, you see beneath the EUR 125 million, that's the net proceeds from the bond. And that gave us an increase in cash in total of EUR 113.4 million. There was a negative exchange rate effect of EUR 12.6 million cash-wise. And therefore, we increased the cash from EUR 66.3 million on the 1st of January 2020 to EUR 167.1 million at year-end 2020. And with that, I want to hand back over to the Chairman. Thank you.

Well, thank you, Jeroen. I will now share the outlook for 2021 with you. So for the remainder of '21, we expect that we are returning to growth in revenues from the sales of RUCONEST as after this impact in the first quarter, mainly driven by the U.S. and expanded EU operations. However, this is still subject to the progression of COVID-19 pandemic and quarterly fluctuations in the revenue as they may become as a result of the ongoing effects of the pandemic. We've seen that, of course, before, and it's unpredictable whether this could be returning. We don't think it's the case necessarily because of the progress in vaccination programs, but it can still happen, obviously. Nevertheless, we expect to continue to be profitable this year, and do not expect to have any additional financing needs to maintain our current business. We will invest, as we stated before, in acquisitions and in-licensing of new development opportunities. As I stated before, we're looking in the growth pillar for the hereditary angioedema for new technologies, early-stage opportunities that we could develop to bring a product next to RUCONEST in hereditary angioedema. And we're looking otherwise for late-stage development opportunities like leniolisib that we can bring to the market within the period from between now and 3 years' time to leverage our commercialization infrastructure and deliver additional growth over and above what we expect that leniolisib can bring and RUCONEST can bring from 2023 onwards. We also continue to invest in the expansion of the production of RUCONEST and the production of leniolisib. We also continue to invest, and you've seen that already stated specifically in the Q1 2021 results in pre-marketing activities for leniolisib and the continuing registration-enabling study for leniolisib as well as the clinical trials for C1 inhibitor for the other and other development activities. And of course, last but not least, we continue to closely monitor the ongoing effects of the COVID-19 pandemic. And I would like -- highlight here that in the background, the entire pharmaceutical industry, and we are no exception, is suffering from disruptions in supply chains for materials, consumable materials that are used for testing patients, for making patients testing -- for doing patient testing for clinical trials but also for manufacturing of our products. A lot of these consumables have become scarce and sometimes have delayed delivery times. So there could be further disruptions in clinical trial recruitment as a result of that. And there could also be, from time to time, some hiccups in production. But this is not specific for pharma, this is specific for the entire pharmaceutical industry as these supply chains come to terms very slowly with the billions of test kits that have to be delivered for COVID-19 tests and the billions of vaccinations that have to be delivered in record time for the vaccination programs all over the world. So this concludes the outlook for 2021. We do not give any further specific financial guidance. Thank you very much. And I've seen that our Chairman has returned now. So Paul, I hand over to you.

Thanks, Sijmen. Thank you very much. Thank you, Sijmen and Jeroen. Sijmen, could you proceed please with answering the questions as received by e-mail from our shareholders on the items that you presented?

Yes, Paul, happy to do that. And I have to start with a couple of questions from the VEB, the Dutch Retail Investor Association. They have traditionally a couple of questions for us. So I will start with the first one. Pharvaris is working on a pill for hereditary angioedema, which is a more attractive route of administration than the intravenous route of RUCONEST. In how many years could this be happening according to Pharming? Well, if I may answer that question, Paul. I think this is a very interesting question. Pharvaris has, of course, given their own estimations on that. And as you have seen, they have to go to several stages of development with this compound. So it's very difficult to pinpoint on that because there could be all sorts of delays in their clinical trial programs that they start to fulfill apart from the fact, of course, that it has to be seen whether such products can be approvable in the end or not. However, let me also point out that also for Pharvaris, but also some other competitors are developing all the same type of products. In fact, a me-too approach, I would say, for suppression of the bradykinin kallikrein pathway, and that this is a different mode of action than RUCONEST. RUCONEST is the only recombinant protein replacement therapy that is currently on the market, and is the only protein replacement therapy that is actually in the foreseeable future of the market. So therefore, I would like to suggest that we continue to look at how Pharvaris develops. Then the second question, to what extent does Pharming expect RUCONEST annual sales to be reduced if as soon as Pharvaris' pill is approved? Well, I would refer to my previous answer. In this case, well, that's -- it remains to be seen when this is approved. And it's very difficult to gauge because even if the pill is approved, a considerable number of breakthrough attacks could be associated with the pill. And therefore, it might not be an attractive alternative to a product like RUCONEST, which delivers protein replacement therapy at a very high dose and very reliable response rates. The third question is BioCryst ORLADEYO has now been approved in the U.S., U.K., EU and Japan. What impact are you seeing this product having on RUCONEST's sales? ORLADEYO has also predicted higher peak sales, EUR 300 million on RUCONEST. Is this due to its oral delivery? ORLADEYO is a prophylactic therapy and does not compete directly with RUCONEST. ORLADEYO competes directly with products like TAKHZYRO, the long-acting monoclonal antibody and HAEGARDA, the subcutaneous prophylactic treatment with plasma-derived C1 inhibitor. If you look at clinical results of a product like ORLADEYO, it appears that there is more breakthrough attacks appearing with ORLADEYO than with TAKHZYRO or HAEGARDA. So I would like to think that If you then take into consideration that RUCONEST is a product that is used for breakthrough attacks that, in fact, the patients that switch away from TAKHZYRO to ORLADEYO could represent an opportunity for -- to add more RUCONEST sales in the segment of breakthrough attacks. So in fact, you could see that ORLADEYO and RUCONEST would be a good combination to make sure that these people have the convenience of an oral prophylactic therapy, which might be very attractive and a very reliable breakthrough medication at hand which they may need from time to time when they're treating themselves with ORLADEYO. The fourth question is about the transgenic technology platform. It's the foundation of Pharming's proprietary drug development. Does Pharming see developments in the coming 3 to 7 years with which this platform may be threatened by new production technologies, for instance? That's an interesting question. So far, we have not seen that a highly glycosylated protein like C1 inhibitor can be expressed in other technologies in a way that is comparable and as efficient as it is produced in our transgenic platform. We have not seen that. Of course, the future can have all sorts of surprises and all sorts of technological developments, but we do not see them yet arising. So it is very difficult to answer this question. But I wouldn't -- at this point in time, we do not see that necessarily to be the case. And I would also like to point out that if you wanted to develop such a platform, it will take a considerable period of time to develop such a platform to the extent that you can also bring that product to the market at the same time. I also would like to point out that we have regulatory exclusivity on the -- in the U.S. market until 2026 and in Europe until 2025 with RUCONEST. And that if you were to be -- wanting to challenge that, you would have started already with developing such platform. Otherwise, you would be too late. So we, in fact, think that exclusivity for RUCONEST could be longer significant -- maybe significantly longer than the current horizon where the official market exclusivity will expire. The fifth question of the VEB is the shares of many biotechnology companies have a significantly higher value in recent years. At the same time, Pharming is looking for companies with promising drugs to acquire. How does the Board of Directors ensure that financial discipline is not thrown overboard and that too much is paid to supplement the pipeline? Well, if I may volunteer to answer that one as well, Paul. I think that we have a very well-defined business development process in the company. We have very frequent conversations between the business development group and the Board of Directors. on several opportunities that we have. And any acquisition opportunity will be -- is carefully considered, and we undertake significant due diligence to ensure that the company is the right fit for Pharming. And this will always include, of course, the potential financial impact of the deal. And I would like to say that in the Board of Directors, there is a very significant experience with regards to in-licensing or acquiring on M&A transactions in the form of several of the nonexecutive directors who have a very impressive track record in that specific part of our industry, I would say. The next question is Pharming has had a very -- a few successful years with a product on the market and a strong balance sheet. That's a major achievement. At the same time, Pharming is a small niche player, and it will take years before the early pipeline will potentially generate additional significant sales. Pharming sees the need for more critical mass, which will make the existing sales distribution franchise more profitable. It's another route in which Pharming merges into a larger hole as quickly as possible, not much more obvious. Well, I would like to answer that question as follows. We have achieved this. And yes, our pipeline, of course, is in an earlier stage, which is quite typical for biotech companies that eventually make it to market, and that's already a rare effect that companies are still independent and make it to market and let alone become profitable. But we've already also crossed the next bridge by in-licensing already a late-stage compound in the form of leniolisib. So I do not necessarily agree with the fact that we only have a fledgling pipeline. Now we already have a late-stage compound that, as you just heard before, we hope to bring to the market by the end of next year. So that is already part of the answer. And of course, we are very heavily looking for other additional products to in-license. However, if there is, of course, a company that comes to us and provides us with an attractive offer that we deem attractive to our shareholders. We will, of course, not hesitate to bring that to the shareholders. It is not us, but it is the shareholders who eventually have to decide about such state. Then the seventh question. Pharming has stated in the past that it's not against being acquired in principle. In the past 1 to 2 years, had Pharming received any signals of interest from parties to acquire Pharming? Well, that's a very interesting question, of course. And it states -- it speaks for itself that we do not comment, of course, on these kind of questions because Pharming is, as you would expect from a company that is actually active in the business development market, is speaking to a lot of companies from time to time, including larger companies. But of course, until such time that anything is there, we will not be able to comment on anything -- on any conversation that are or are not ongoing. And I think I'd like to express as well that we are in a strong financial position, and remain focused on our own ambitious growth strategy through our 3-pillar strategy including the organic and inorganic growth. Then the eighth question is, would Pharming be willing to take the initiative and take an investment bank to get more in the picture of parties that might want to acquire Pharming? Thanks to RUCONEST, Pharming is cash flow positive and has a solid balance sheet. So it can do any negotiation process from a position of strength instead of with her back to the wall. In addition, valuations in the biotechnology sector are now very high. With that, the risk of the current strategy of taking over yourself and paying too much becomes an opportunity Pharming itself has taken over. Yes. Well, we, of course -- like I said before, we are very active in the business development scene. We speak to a lot of investment banks, and they bring us opportunities from time to time, and I have no doubt that these investment banks also talk about us to other companies. That's the nature of investment banks. So therefore, yes, we are in the scene, we are very active and we are very actively talking to either acquire opportunities or as a result of investment banks talking about us that maybe companies come to us to discuss with us offers to acquire us. So it is an ongoing process, I would say, that is natural for a company like our size and in this biotechnology market. And I think it's important to note that the recent step to take a dual listing on the Nasdaq Global Market, is an important step for Pharming because it provides us -- it was the reason to go to the Nasdaq Global Market with a secondary listing. It provides us with a currency, namely the U.S. shares, the ADSs to actually finance such transactions of -- as and when we acquire other companies. I think that's a very attractive way for other companies to be going into a deal with Pharming. So in other words, a lot of activity are ongoing. And of course, we cannot comment on any of these things until such things take the nature that we would be willing to actually bring this. And then, of course, we come to the shareholders and discuss this with shareholders as according to the normal rules. And the last question that I have here. The contract with Sobi has been terminated. But until then, supplies have to be delivered to Sobi at below costs price. Was this a mistake in the negotiations of the contract? Or is there something in return? Well, this is a very historical question. Back in the days, in 2009, as I recall, we badly needed a European partner not only for upfront payments, but also for commercial infrastructure that we did not have and we did not have the means for. So we engaged Sobi. In fact, we engaged the Swedish Orphan, which was the predecessor of Sobi and the party it merged with later, because they were specialized in marketing orphan drugs in the European area. At that point in time, the deal was closed with an upfront payment and with milestones to be paid when the product was approved, which were badly needed. At that point in time, we also are estimating certain cost of goods at certain prices in the European markets. At least Sobi was instructing us about that. Sobi, I think, made a -- I don't know whether they made a mistake or not, but the reality turned out to be very different than the pricing structure in the European markets. And that, in combination with very low volumes realized by Sobi, also made the cost of goods very different than originally assumed. So I would say it was a combination of factors that led to the fact that we had to supply Sobi under that contract for quite a period of time without making any money on the supplies. And that hasn't been no secret. We've been reporting on that for years. But it's also important to realize that the volume-driven nature of our manufacturing contracts for the purification of RUCONEST was a very important element because without the volumes that Sobi was realizing, the cost of goods would have been higher. So therefore, it's served a purpose. It also was a good time to say goodbye to Sobi and commercialize on our own in Europe and keep the whole value chain for ourselves. So Europe now has become a business that is making a limited amount of profit. And that mostly is also very important, serves as a foundation for a rollout of leniolisib as and when leniolisib gets approved in the European Union. So that was the question that I have received here or that we have received here as far as I can see it. No, I have some more questions, sorry. That was the question, the VEB questions. Then I have some questions from the long-term shareholders' club. Those are more technical questions. Is a bridging study necessary for each indication in a Phase II where the rabbit C1 was conducted. That's a very good question. I would like to think that a bridging study between the 2 types of C1 inhibitor is probably only necessary once. But as cannot be the -- [ we are first bridging study ] to be completed. We will update the market accordingly as and when we are ready to do that bridging study, I would say. We cannot comment on that at this point in time. And after a successful bridging study, can [indiscernible] C1 be used immediately for Phase III? Or is another part or Phase II expected? Again, that is -- depends on the outcome of the Phase II study in that specific indication. So you can either switch to a Phase III or you have to do another Phase II or IIb study. It really depends on the outcome of the earlier Phase II study with the rabbit products. Then there's a question about an investigator-sponsored study on adverse reactions in IVIG infusions. Unfortunately, we can't comment on that. It's an investigator-initiated study by IMMUNOe in the U.S., and I would suggest everybody to read that specific article. Then there's a question about what is the next steps with regards to COVID-19. The next steps with regard to COVID-19 is that we evaluate the results of the study. And as I said before, it is an adaptive design study. So at any point in time, we can decide to do an analysis and then look for what kind of signals we see. Following that, it's -- of course, the next step is to speak to the regulatory authorities according to the signals that we see and formulate the next steps. This could be a Phase III, of course, but it could also be that there is a possibility to look for prevention of ARDS, the adult respiratory distress syndrome, not necessarily caused by COVID alone but by other diseases, which is, of course, the case with ARDS. So it's very difficult to speculate on this absent any specific data that we have in our hands. Then there is a question about a concentrated version of RUCONEST, the so-called 3-liter vial. We are continuing to work on that. We've commented on that before that we had a bottleneck in the manufacturing and had insufficient product available to validate the last stage of the manufacturing process. That will take away some 8,000 vials out of the production and have these -- not -- and we are not able to sell those until such a vial is approved. That's still to be the case. And we are looking now towards probably the end of the year to take another decision on that, and that depends entirely on the ongoing upscaling of the production and demand in the market whether we actually decide or not decide to produce these products, to do these validation runs and then subsequently formulate clinical trials, for instance, in [ intramuscular ], over the last years. Then there's a few questions about the ongoing collaboration in China, and I would like to summarize that by answering those that at this point in time, we are working together with Sinopharm, and Sinopharm is very busy in actually working on their -- on getting the production facility up and running. And RUCONEST may be brought to China as an importation drug first, and later on, the game plan would be that Sinopharm would then be able to manufacture RUCONEST in China. And if that RUCONEST product is exactly the same product, it can also be then exported and sold by Pharming outside of China. So in fact, the game plan was and still is that Sinopharm is an [ addition ] for the production of RUCONEST once, of course, the factory in China has been approved by the European and American authorities. And I think the rest of the questions, we have answers. And one question about dividend payment. Well, we do not expect to make any dividend payments, as is usually the case with companies in our sector during that growth phase as this is intended to invest in this platform. So then one more question about -- we understand that in the current times, it's not easy to realize a takeover in the U.S. Is Pharming thinking more of an in-licensing or acquisition or both? That, I think, is depending on the opportunity and on the other party. If, of course, a company looks for a partner to commercialize their products and wants to out-license such product, then we're very happy to look at that and in-license such product. That can be for the U.S. That can be for Europe. It can be for the whole world. There are also some variations that are possible. If a company is actually interested in being acquired by Pharming, then, of course, we have to take a look at whether this is an interesting proposition. So therefore, this is an ongoing process with many variables. And rest assured that we have a very structured business development process in our company now. We have very experienced individuals. We have very experienced nonexecutive directors in -- that have a great track record in mergers and acquisitions and in-licensing. And therefore, we take all opportunities very seriously, and we evaluate them very seriously. But it is a very important part of our growth strategy to actually in-license and/or acquire assets that can bring growth in the near years like leniolisib to accelerate the growth and leverage our commercialization capabilities, both in Europe and in the U.S. I think that is more or less the questions that we have received, Paul. I've tried to summarize a couple of them, and I don't know if there's any more questions coming in at this point in time.

Yes. Thank you, Sijmen. We'll give our shareholders just a couple of seconds to answer any questions -- to ask some questions online. Please use the online chat function if you have a question before we close the agenda item #2. Aad, could you please check whether any questions were asked online?

No. No question received, Paul.

Okay. Thank you, Aad. Thank you, Sijmen. I'd now like to give the virtual floor to Ms. Deb Jorn, the Chair of our Remuneration Committee, to elaborate on the remuneration report of 2020. This report is included in our annual report and on today's agenda as Item 2B. Deb will also address the related questions that were received from our shareholders by e-mail. Deb?

Thank you, Paul. Good afternoon to our shareholders. On the 11th of December 2020, the new remuneration policy for the Board of Directors was adopted at the Extraordinary General Meeting of Shareholders. In the remuneration report 2020 that is included in the annual report, you will find a summary of both the new policy and the remuneration practices that were in place until December. The remuneration report also summarizes, in accordance with the European shareholders' rights directive as transposed into Dutch law, how these applicable policies were implemented in the financial year 2020. A majority, 73.79%, of the votes cast by our shareholders on the 20th of May 2020 were in favor of the proposal to give a positive advice regarding the 2019 Remuneration Report. Several shareholders, however, recommended a more detailed disclosure of the performance by the executive Board members on their performance targets in each future annual remuneration report. This feedback was taken into consideration by us for the 2020 Remuneration Report. Accordingly, a retrospective disclosure of the performance of the members of the former Board of management on their targets is included in the 2020 Remuneration Report. Having said that, I would like to emphasize that we started 2020 with the former policy in which no specific procedure was included for annual retrospective disclosure of performance on targets. Moreover, the metrics applied for the 2020 performance measures are not identical to those defined in the new remuneration policy. Therefore, 2020 should be considered as a transitional year regarding the disclosure of performance. The 2020 report discloses all targets in a qualitative manner and specifies the applicable weightings, limits and scores. For the next remuneration report, we will take the next step to respond to the expectations for shareholders. I assume you've had an opportunity to read the remuneration report that is included in the annual report. Therefore, I will just mention a few highlights. Firstly, I would like to mention that the Board of Directors concluded that the CEO and the other members of the former Board of management satisfied the preset corporate and personal objectives for 2020. Accordingly, the Board of Directors determined, upon recommendation from the Remuneration Committee, the awards and payouts in accordance with the applicable short-term and long-term incentive programs. The short-term annual incentive payout is paid in cash. As explained on Page 78 of the annual report, the total score for the short-term annual incentive was set at 100% with reference to the scores on the specific short-term-oriented targets. The Board of Directors recognized, inter alia, for the targets related to commercial and operational execution the challenges that were set by the restrictions due to the COVID-19 pandemic for sales force and other activities. The Board of Directors also recognized the highly positive impact of the convertible bond issue in January of 2020 on the financing costs and cash flows and the importance of the NASDAQ listing in December of 2020 in the context of the strategy execution. The NASDAQ listing was an additional achievement that was not included in the 2020 targets. The restricted shares that were awarded to the CEO in quarter 1 of this year under the new incentive program, as approved by our shareholders on the 11th of December 2020, will not vest until the first quarter of 2024. Additionally, these shares are subject to a retention period of 5 years for the date -- from the date of grant and shall, therefore, be retained by the CEO for an additional 2 years beyond 2024. The applicable targets for vesting are a combination of total shareholder return and strategic corporate objectives for the 3-year performance period, as further described in the remuneration policy and the remuneration report. However, the first year vesting period for the 2020 restricted share grant to the CEO under the one-off transition arrangement that was approved by our shareholders already ended on the 31st of December 2020. The Board of Directors determined that 60% or 840,000 shares vested out of a total of 1.4 million restricted shares for the first annual tranche as only the strategic objectives had been satisfied. The score on total shareholder return compared to the AMX Index and the NASDAQ Biotechnology Index did not result in a payout. This reflects the fully performance-based nature of this transition arrangement and of the new long-term incentive program. I propose that I will now address questions from our shareholders with regard to the remuneration report that were received via e-mails.

So first, the VEB wrote to us that they continue to be against variable share-based remuneration for nonexecutive directors, although Pharming grants the shares as a fixed amount. The VEB mentioned that due to the fluctuation in the share price, these shares will remain of a variable nature. The VEB asked us to clarify the reasons for granting the nonexecutive directors' shares as part of their remuneration. We explained our considerations to our shareholders during the EGM held on the 11th of December 2020. Our shareholders adopted the new remuneration policy, including the proposed remuneration for our executive directors, during that meeting with a high majority, 99.28%, of the votes cast. In summary, a recent benchmark study had indicated that shares should be offered as part of the remuneration package to attract qualified nonexecutive talent from the U.S. to supervise Pharming's continuous efforts to unlock its full growth potential in the U.S. market. I also would like to note that as the grant is not dependent on performance, the shares are similar to those purchased by the nonexecutive directors by way of private investment. The Dutch Corporate Governance Code permits private shareholdings by nonexecutive directors provided that it will be a long-term investment. That principle is adopted in our policy and, therefore, also applies to the shares granted to nonexecutives. We did not receive any other questions on the remuneration report prior to the meeting. So thank you, Paul.

Thank you very much, Deb. We now invite our shareholders to use the online Chat function if they would like to ask any additional questions, please. Aad, could you check as to whether there are any other questions asked online?

No. No questions, Paul.

Okay. Thank you, Aad. We will now proceed with the voting results on the remuneration report for the financial year 2020. In accordance with the European shareholder rights directive, as implemented in Dutch law, you are asked to cast an advisory vote. All votes in favor of the report mean that the remuneration report is appreciated and deemed positive. Any votes against the proposal are understood to imply that the report does not meet the expectations of these shareholders. The advisory vote will not be binding, but we will explain in next year's remuneration report how the vote of the general meeting was taken into account. As explained during the introduction, we received, prior to the meeting, proxies and voting instructions from all shareholders present or represented today. 98.16% of the votes were cast in favor of the proposal. So the proposal to give a positive advice has been adopted. The next item on the agenda is agenda Item 2C on corporate governance. Sijmen, could you introduce this item and also the subsequent agenda, Item 2D, for a summary of the dividend policy? We will address the questions of our shareholders on both subitems after the introduction by Sijmen.

Thanks, Paul. Of course. Agenda Item 2C has been included to update you on material developments in the field of corporate governance. During our Extraordinary General Meeting on 11 December 2020, we explained in detail the change of our former 2-tier Board model, featuring a management Board supervised by a separate Supervisory Board into a 1-tier board model. We would like to thank our shareholders again for approving, during the EGM, the related changes to our Articles of Association. As a result, the management and the supervisory expertise were integrated into 1 single corporate body, i.e., the Board of Directors, as of the 11th of December 2020. Moreover, since 23 December 2020, our American depository shares have been listed on the NASDAQ stock market in the U.S. Our ordinary shares continue to trade on Euronext Amsterdam. Pharming has taken steps to ensure compliance with the applicable U.S. regulatory requirements. Inter alia, as announced on the 7th of April 2021, Pharming filed that same day as annual report for 2020 on Form 20-F with the U.S. Securities and Exchange Commission. During the EGM on 11 December 2020, you were informed that in my capacity of CEO, I'm supported by the Executive Committee in the execution of my task and responsibilities. I would like to take the opportunity to inform you about changes in the composition of the Executive Committee. First of all, the tenure of our Chief Medical Officer, Bruno Giannetti, will end today. Bruno served as a statutory Management Board member and Executive Officer for more than 15 years and joined our new Executive Committee on 11 December 2020. I'm, however, pleased to inform you that Pharming can continue to benefit from Bruno's wealth of experience as he has been engaged by us as a consultant to invest -- to go into deep a scientific investigation, initially focused on the complement system because the complement system is, of course, a very important part of the immune system where significant knowledge can still be gained and where, as you know, we are doing clinical research in several of these areas, including such indications as pre-eclampsia and maybe other indications in the future. And I would like to thank here, in this case, Bruno, for all your time and commitment to Pharming. We've been together, and I've only joined Pharming, of course, end of 2008. We've been together and worked through very difficult times. And the company has grown to what it is now today. Also thanks to your commitment and your hard work. Thank you very much, and of course, it's very sad that we have to say goodbye in this way, but we will, of course, organize a farewell for you as well as and when we can get together in life again. So Bruno, would you like to take the opportunity to have a few words to the meeting?

Yes, Sijmen. So thank you very much for the very kind words. Actually, those who know me know that I am not exactly famous for having long speeches during the AGM meetings. So I just want to say a few words of thank you, actually. First of all, thank you to shareholders, especially those who have been with us for a long period of time. Without your repeated support and your confidence, we could not have achieved what we have achieved thus far. You have trusted us even in times where it seems unlikely that we would ever be able to make it. So thank you for this. A warm thank you to the Board. I would like to thank you. Thank you everyone, thank you to the ladies and gentlemen that are on the present Board nowadays for their patience and providing guidance to us as a management through these difficult times. However, amongst all the members of the Board that came and went during 15 years, I wish to personally thank Barrie Ward, Juergen Ernst and Aad de Winter for their support and wisdom throughout the time I have been serving with the company. Without Barrie, Juergen and Aad's support, I have to confess, and their advice -- and this is just my personal humble opinion, I would probably not be here today. RUCONEST would not be on the market, and Pharming as we know it today would not exist. So not just me, but also thousands of patients and, ultimately, all of us owe a lot to these gentlemen. Sijmen. A very, very special thanks to Sijmen, Sijmen de Vries, a very special CEO, I have to say. We have been together for 13 years, this bumpy ride, through good and difficult times. And we have managed to take the company where it is now. I'm very proud of it. And I consider the present situation as a starting phase of something that is really promising and big. I deeply admire your perseverance and tenacity. I admire your lateral thinking and your way to deal with journalists, investors, shareholders and analysts. This is something I would never be able to have done in the past. So thank you very much for taking up this burden. Did we always agree on matters? Of course, no. But we normally agree 90% of the cases, in 90% of the case, sometimes even using the same words without having discussed the matter before. And this is, in my opinion, more than good enough to manage a company on a daily basis. Furthermore, I also firmly believe the constructive discussion conducted with mutual respect, and this was always the case, is one essential factor for the strategic development and success of every project. Now specifically today, I want to thank you, Sijmen, for 3 things: A, for giving me this opportunity to continue to contribute to the success of the company also after my official retirement; B, for listening and considering arguments even when they are not your own ones; and C, especially for me for being one of the reasons that the famous Pharming world, there is never a boring moment in the company, is really true because you always come up with some surprises and some interesting ideas that, for a couple of moments, sometimes take my world upside down with pleasure, I have to say. Last but not least, thank you to all our good Pharming people, all those fine, loyal, committed and distinguished experts I had the pleasure and the honor to work with. After almost 16 years, too many to be mentioned by single names. They are one of the main reasons, actually, why I've always been looking forward to coming to work every single day. Pharming is a family, and you get this feeling pretty soon after being joined this company. I consider it a privilege to have been able to join the company in times where this family feeling was just there due to the tiny size of the company. As now the company keeps growing, I hope we'll be able to keep this unique attitude also as long as possible. One last word about my aspects of my future -- about some aspects of the future. I belong to this Pharming family. My heart is with it and that we keep trying to contribute to its prosperity and success as long as I can as long as you all wish. Thank you very much.

Thank you very much, Bruno, and all our best wishes for the future, and we look forward to continuing to collaborate in such projects. In our Executive Committee, Bruno will be succeeded by a new Medical Officer and a new Chief Scientific Officer. The latter is a new position. We have almost completed the recruitment procedure and expect to communicate the names of the new CMO and the new CSO on our website in the very near future. In addition, our Chief Ethics and Compliance Officer, Anne-Marie De Groot, regretfully had to decide to leave Pharming for personal reasons, effective 1 May 2021. She was succeeded by our Company Secretary, Ruud van Outersterp. Finally, I refer to our report on how Pharming has applied the Dutch Corporate Governance Code in 2020, as included in the annual report and the detailed annual corporate governance statement on our website. The slide that is now shown on the screen includes a summary of the few deviations. There were no material changes compared to our 2019 report. As for the dividend policy, agenda Item 2D, Pharming continues to follow its existing policy not to pay dividends. Payment of future dividends, if any, to shareholders would effectively be at the discretion of its Board of Directors after taking into account various factors, including our business prospects, cash requirements, financial performance and new product development. Today, however, the Board of Directors does not envisage the payments of dividends in the coming years. Over to you, Paul.

Thank you, Sijmen. We will now proceed with the questions as received by e-mail from our shareholders on corporate governance and our dividend policy. Sijmen, could you kindly address the questions that we received prior to the meeting?

Yes, Paul. Were there any questions? Oh, yes. Sorry. An association named the Long-term Shareholders Club asked us how Pharming feels about the dividend payment, of course, of, for example, $0.01, to motivate shareholders. As stated earlier, and I believe I already answered that question accidentally, Pharming continues to follow its existing policy not to pay dividends, and we do not expect this to change. So it's not likely either that we will make such payments. We're also not convinced that such payment is the right way to motivate our shareholders. The association asked us also whether we expect to create a position in the U.S. that will be the equivalent of the role of Mireille Sanders, our Chief Operations Officer in the Executive Committee. As Chief Operations Officer, Mrs. Sanders has a group-wide responsibility. Therefore, there is no need to appoint a separate COO in the U.S. Of course, there is an effective collaboration with the U.S. team where appropriate. There were no further asked -- no questions asked prior to the meeting here Paul.

Great. Thanks, Sijmen. We now invite our shareholders to use the online Chat function again if they'd like to ask any additional questions. Aad, could you please check whether any questions were asked online?

No questions came up.

Okay. Thank you, Aad. We will now proceed with the next agenda item, the financial statements of 2020, as included in the agenda item as 2E. The financial statements can be found on pages 94 up to and including Page 172 of our annual report. The financial statements have been audited by our external auditor, Deloitte Accountants BV, in accordance with the assignment given by your general meeting on the 20th of May 2020. Deloitte has issued an unqualified auditor's report for the financial statements 2020 that can be found on pages 184 up to and including 190 of the annual report. I now invite Ms. Ingrid Buitendijk, partner at Deloitte, to present the highlights and main findings that followed from the audit by Deloitte.

Thank you, Paul. Indeed, I'm Ingrid. I'm another partner with Deloitte, and I've been the auditor of Pharming Group since 2019, so for 2 years. I would now like to provide you an overview of the audit that we have performed. We performed an audit of the financial statements, including the management report, over 2020. We have issued an unqualified auditor's report signed as of April 6, 2021. The auditor's report also includes the management report. The government section included the remuneration report. And the goal here is to comply with the requirements of Part 9, Book 2, including also the Dutch Standard 720. In our auditor's report, we highlight our key audit matters. This year, for 2020, that has been revenues and trade receivables and other payables all in relation to rebate accruals in the U.S. Now the key audit matter was the intangible assets relating to the termination of the Sobi contract. And other relevant areas of our audit, which have also been highlighted in our auditor's report include the group audit in accordance with ISO 600 and the remuneration report. In terms of communication with Pharming, we have had several meetings and calls with the Supervisory Board, including the Audit Committee. We have issued 3 formal reports, which is the audit plan, the management letter and the year-end report. We determined the materiality in our audit at EUR 2 million. At the component level, we used a lower materiality level of EUR 1.2 million. In determining the materiality levels, we also take into account qualitative considerations. And the scope of our audit included 100% of sales and 98% of total assets. We performed full-scope procedures for the significant entities in the Netherlands and the United States. And with that, I would like to close our brief overview of the audit that Deloitte has performed. Thank you, Paul.

Thank you so much, Ingrid, for your explanation. We did not receive any questions by e-mail from our shareholders on the financial statements. Aad, could you just check and see whether any questions were asked online, please?

Yes.

Okay. Thank you, Aad. We will now proceed with the voting results on the financial statements. Also, for this agenda item, we received proxies and voting instructions from the shareholders present or represented today. 97.94% of the votes were cast in favor of the proposal, so the financial statements for the financial year 2020 have been adopted. On behalf of the entire Board of Directors, I'd like to thank our management and all our employees of Pharming for their dedication and congratulate them on the great results achieved over the year 2020. The next topic on the agenda is agenda Item 2F, the proposal to discharge the members of the Board of Directors. The scope of this discharge extends to the exercise of their duties during the financial year 2020 insofar this is reflected in the annual report and the financial statements and other public disclosures or in statements made during this general meeting. The proposal takes into due consideration that throughout the year 2020 until the 11th of December 2020, the statutory responsibility for the management of the company was vested in the former Board of management, supervised by the former Board of Supervisory Directors. Following the effective date of the corporate governance structure change on the 11th of December 2020, the one to your Board of Directors is composed of the CEO as the Executive Director and the members of the former Board of Supervisory Directors now as nonexecutive directors. We did not receive any questions on this item prior to the meeting. We invite our shareholders to use the online Chat function again if they'd like to ask any questions. Aad, could you please check whether any questions were asked online?

No questions, Paul.

Okay. Thank you, Aad. The proxies and voting instructions as received prior to the meeting for this agenda item indicate that 98.93% of the votes were cast in favor of the proposal, so the proposal has been adopted. The next agenda item on the agenda is appointment of new nonexecutive directors. This agenda item relates to the proposed appointment of Jabine van der Meijs, Steven Baert and Leonard Kruimer as new nonexecutive Board members. As mentioned during my opening remarks, the tenures of Barrie Ward and Aad de Winter were scheduled to expire at the closing of today's meeting. In addition, Juergen Ernst retired on the 23rd of November 2020. We have the great pleasure to announce the nomination of Jabine, Steven and Leonard on the 23rd of March 2021 already. Since that public announcement, the nominated directors have served as observers to the Board of Directors. Accordingly, they were able to gain insight into Pharming's operations. The Board of Directors concluded, following the extensive search process, that Jabine van der Meijs, Leonard Kruimer and Steven Baert will complement the current nonexecutive directors in view of their strong track record and wealth of experience that each of them bring to the Board of Directors. The diversified composition of the Board of Directors following their appointment will reflect and support the company's strong growth ambitions and be fully consistent with the collective profile of the Board of Directors. The Board of Directors will also continue to meet applicable Dutch gender diversity targets. The proposal on the agenda by the way of a binding nomination from the Board of Supervisory Directors is to appoint Jabine van der Meijs, Leonard Kruimer and Steven Baert as new members of the Board of Supervisory Directors with immediate effect until the closing of the Annual General Meeting of Shareholders in 2025. Leonard will succeed Aad de Winter as the Chair of the Audit Committee as his appointment as nonexecutive director. I invite Jabine, Steven and Leonard to quickly introduce themselves and explain to you their main considerations for joining Pharming as a nonexecutive Board member. Jabine?

Thank you, Paul. Good afternoon. I'm Jabine van der Meijs. I'm very pleased to have been nominated as a Pharming Group nonexecutive Board director. I would like to take this opportunity to introduce myself. I obtained my Master of Science and my pharmacy qualification at the University of Utrecht here in the Netherlands. I completed my professional accounting degree in the U.K. with the Chartered Institute of Management Accountants. After university, I joined the Royal Dutch Shell Group, where I worked for 25 years as a senior finance executive. During this period, I did a variety of roles, and I worked for 50 years outside the Netherlands. I have the opportunity to be based in Scotland, England, Borneo and Australia. In my last 3 roles at Shell, I was the financial controller for the Brunei Shell Company, the Finance Director for Shell Australia; and the Global VP Vice President, Finance for Capital Projects for Shell's Projects and Technology business. The last 4 years, I was the Executive Vice President and CFO of the Royal Schiphol Group, where I was responsible for finance, risk and audit, IT, procurement and contract management and the international investments. Over the last 10 years, I've been a nonexecutive board member at various companies and in various industries. I'm currently a member of the Supervisory Board of Kendrion, where I'm the Chair of the Audit Committee; and I'm a member of the Supervisory Board of Koole Terminals Holding, where I'm the Chair of the People and Remuneration Committee. I recently also joined the Board of Directors of Grundfos Holding, a privately held Danish company. I'm excited to become a Board member of the Pharming Group at this important time of in its evolution. I look forward to sharing my business and finance experience and working with this talented and dedicated Pharming management team and the other Board members towards the delivery of the company's futures plan and successes. Thank you.

Thank you, Jabine. Steven?

Thank you, Jabine. Thank you, Paul. [Foreign Language] Good morning and good afternoon, ladies and gentlemen, dear shareholders. My name is Steven Baert. I'm a Belgian citizen that lived since 2014 in Switzerland where I worked for Novartis as the Chief People Officer, a member of the Executive Committee and a permanent attendee to the Novartis Board of Directors. As such, I bring extensive experience with corporate governance, including matters such as ESG, compliance and risk management, executive pay, proxy advisers and binding and say-on-pay matters as well as board composition and succession management. I've been working in the life sciences industry for the last 20 years, of which 15 years with Novartis, and prior to that, I worked with Bristol-Myers Squibb. I've lived and worked in Belgium, the U.K. Spain, France, Switzerland and the U.S.A., and I started my career in fast-moving consumer goods with Unilever. By training, I studied [indiscernible] and then did an MBA. My real passion is to build organizations, teams and cultures that are really fit for purpose to make strategy happen. I believe that execution rarely happens by coincidence but is really the result of a focused effort to translate a strategy into a plan that includes a management team and organizational structure, governance, a culture that really supports the aspirations of a business. And that's why I'm really excited and proud to be proposed for election to the Pharming Board, I believe, in a meaningful purpose and promise of -- to the current and future patients of Pharming. And I want to contribute to the Board by focusing on leadership, governance, organization, succession and culture and also bring a general curiosity and passion for this industry. Outside work, I'm focused on providing access to education, especially for children that grow up in difficult circumstances. I love hiking, biking sailing but also cooking, reading and architecture. And I'm married to [ Tina ]. We have 3 amazing children. Thank you for your confidence. I look forward to working with my colleagues on the Board with Sijmen and the team, with Paul, and I look forward to representing you on the Board. Thank you. Back to you, Paul.

Thank you, Steven. Leonard? I think you're on mute. Leonard, I think you're on mute.

Thank you, Chairman. I first entered the biotech industry in 1997. I joined a company called Crucell, which was a gene therapy start-up in Leiden as a CFO. And together, actually at Pharming, Crucell was one of the very few biotech companies in the area at a time. As a matter of fact, soon after I joined, we committed to build a dedicated facility with laboratories and offices in the bioscience park in 2000. So in 14 years that I joined Crucell, the company grew from a startup to a profitable international organization, listed on 3 stock exchanges with sales and marketing in -- operations in Europe and the United States and in Asia. We raised quite a bit of money, well over $1 billion, and we bought and we sold companies. And I spent approximately 50% of my time during those years in the United States, interacting very extensively with the capital markets and the regulators and investors, both in the U.S. and Europe. So I think in the period I joined -- that I was with Crucell, we went through every single stage of the company's life cycle together with these challenges in product development, in manufacturing, in financing, in regulatory affairs, getting product approved, et cetera. They are typical of the industry. Johnson & Johnson bought a company in 2011 and, as a matter of fact, uses Crucell's core technology to make its COVID vaccine today. I started my career with Pricewaterhouse in New York. I studied accounting and finance in the United States and my public accountancy in New York and came to Europe, actually, in 1993 to work with McKinsey. I was there for about 5 years and, afterwards, held a number of executive positions with companies like Continental Can and GE Capital. After the acquisition of Crucell, our entire executive team joined Johnson & Johnson. However, it wasn't too long until I missed the excitement of an entrepreneurial, fast-moving and excited smaller biotechs. So I took on positions as CFO and CEO for a number of smaller companies on sort of an interim basis. And since about 6 years, now I serve on the boards of of 3 NASDAQ-listed biotechs in Scandinavia and the United States. In one of the companies, I'm the Chairman. In all of the companies I'm member of the Audit Committee. I think that the role of the nonexecutive director in the biotech industry allows you to leverage your experience and your knowledge to help companies grow and develop faster. And as such, I look forward to contributing to strategy, to risk management, finance at Pharming. I greatly respect to challenges that Sijmen with his team has overcome -- faced and overcome in the past, and they're bringing the Pharming company where it is today. I look forward to work together with the Board, the management and to contribute to Pharming's exciting journey going forward. Thank you, gentlemen.

Thank you, Leonard. Thank you, Jabine and Steven, as well. We did not receive any questions on this agenda item prior to the meeting. We invite our shareholders to use the online chat function if they'd like to ask any questions. Aad, could you please check whether any questions were asked online?

No. Not on this subject, Paul.

Okay. Thank you, Aad. I propose then that we move on to the voting results for the proposals to appoint Jabine, Steven and Leonard in accordance with details as set out in the explanatory notes to the agenda for today's meeting. The proxies and voting instructions, as received prior to the meeting, indicate that 97.99% of the votes were cast in favor of the proposal to appoint Jabine van der Meijs. 97.82% of the votes were also cast in favor of the proposal to appoint Steven Baert. And finally, 93.05% of the votes were also cast in favor of the proposal to appoint Leonard Kruimer. So the proposals have all been adopted. Just my personal congratulations to you, Jabine, Steven and Leonard. We're so happy to have you on the board and wish you every success in your new role. The next item on the agenda is the reappointment of the Executive Director and CEO. The current 4-year term of Sijmen de Vries, our Executive Director and CEO, expires at the closing of today's meeting. The Board of Directors has assessed the performance by the CEO in the past 4 years and reached a very positive conclusion. The CEO has guided the company through challenging times and established, supported by its management team, a very solid basis for future growth and the creation of long-term value for Pharming and all of its stakeholders. Therefore, the Board of Directors unanimously concluded to propose to our shareholders to reappoint Sijmen to enable the company to continue to benefit from his strong leadership, knowledge and experience in the coming years. Accordingly, the Board of Directors is proposing today, by way of a binding nomination, to reappoint Sijmen de Vries as Executive Director and CEO for another term of 4 years to the immediate effect and expiring at the end of the Annual General Meeting to be held in the year 2025. We did not receive any questions on this agenda item prior to the meeting. Aad, could you please check whether any questions were asked online?

No.

Thank you, Aad. I propose, therefore, that we move on to the voting results for the proposal to reappoint Sijmen in accordance with details, as set out in the explanatory notes to the agenda for today's meeting. The proxies and voting instructions, as received prior to the meeting, indicate that 97.65% of the votes were cast in favor of the proposal to reappoint Sijmen de Vries. Therefore, the proposal has been adopted. Congratulations, Sijmen. Continue with agenda Item 5, the proposal to reappoint Deloitte Accountants BV as the company's external auditor for the financial years 2021 and 2022. This proposal also extends to the examination of Pharming's annual report and financial statements, to report to the Board of Directors and to issue an auditor statement each time for both financial years. Aad, could you please introduce this agenda item as Chairman of the Audit Committee?

Yes. As said before, Deloitte was first appointed as external auditors during the General Meeting in 2019. And the Board of Directors, supported by the Audit Committee, evaluated [ March ] the performance by Deloitte of the duties in the past year and has reached a positive conclusion on their reappointment. The proposal to reappoint Deloitte for 2 financial years ensures the continuity and also meets the related requests by several of our shareholders during previous shareholder meetings. We did not receive any questions on this agenda item prior to the meeting. And well, if there are any questions on it, we wait a few seconds. No further questions.

Okay. Thank you, Aad. I propose then that we move on to the voting results for the proposal to reappoint Deloitte as external auditor in accordance with details as set out in the explanatory notes to the agenda for today's meeting. The proxies and voting instructions, as received prior to the meeting, indicate that 97.73% of the votes were cast in favor of the proposal. Therefore, the proposal has been adopted. The next item on the agenda is Item 6, the proposed authorization of the Board of Directors to issue new shares or rights to acquire shares. You will have noticed that this agenda item includes 2 proposals. Both proposals cover the designation of the Board of Directors for a period of 18 months starting today as the body authorized to issue new shares or rights to acquire shares and to limit or exclude preemptive rights of existing shareholders. The first proposal under agenda Item 6.1 is limited to 10% of the issued share capital at the time of issuance and is intended for generic corporate purposes. This authorization may be used, for example, for Pharming's general financing purposes and up to 2.75% of the issued capital to grant and issue stock options or restricted shares in accordance with the applicable equity incentive plans for our staff members. This authorization will replace the general authorization granted during the AGM on the 20th of May 2020. I would like to emphasize that these equity incentive plans do not include the share-based incentive plans for our CEO or the transfer of shares to our nonexecutive members of the Board of Directors as part of their remuneration. These equity remuneration elements continue to be exclusively covered by the decisions adopted by the General Meeting of the Shareholders on the 11th of December 2020. The second proposal under agenda Item 6.2 is also limited to 10% of the issued share capital at the time of issuance. This additional authorization may be used for the financing of mergers and -- or acquisitions only. Acquiring or in-licensing new programs or companies that have assets that can be commercialized during -- using Pharming's in-house sales and marketing infrastructure is one of the 3 pillars in our strategy, as you saw. Therefore, the proposed authority is required to provide the Board of Directors the required flexibility to respond in a timely manner and adequately to merger -- a timely and adequately to merger and/or acquisition opportunities. We did not receive any questions on this agenda item prior to the meeting. We invite our shareholders to use the online chat function if they'd like to ask any questions. Aad, could you please check as to whether any questions were asked online?

No further questions.

Thank you, Aad. We will now move on to the voting results. The proxies and voting instructions, as received prior to the meeting, indicate that 98.2% of the votes were cast in favor of the proposal under the agenda Item 6.1, and 73.4% of the votes were cast in favor of the proposal under agenda Item 6.2. Therefore, both proposals have been adopted. The next agenda, Item 7, relates to the proposed designation of the Board of Directors for a period of 18 months starting today as the body authorized to repurchase fully paid up shares in its own capital up to 10% of the issued capital. I kindly refer to the details in the explanatory notes to the agenda for today's meeting. The proposed designation will replace the current authorization is granted by the general meeting on the 20th of May 2020. We did not receive any questions on this agenda item prior to the meeting. Aad, could you please check whether any questions were asked online?

No questions. No, Paul.

Thank you, Aad. We will move on to the final voting results for today's meeting. The proxies and voting instructions, as received prior to the meeting, indicate that 99.18% of the votes were cast in favor of the proposal under agenda Item 7. Therefore, the proposal has been adopted. The final agenda, Item 8, is any other business. Under this agenda item, we will address the questions that are of a more generic nature, obviously, to the extent and scope for this meeting and also some questions that came up -- came in during this meeting but could not be answered earlier. I'll now give you a few moments to ask any questions using the online chat function. As mentioned earlier, we will publish all questions and answers on our website, also those questions that we could not answer now. Aad, could you please check whether any questions were asked online?

Yes. There's one question from the VEB with one further question about our dividend policy. And Sijmen, you have read the question. They are very in favor of paying out dividends because of our financial position, and also it would help our investors to -- and also our share price in the future. But I think the answer was already there in the presentation. I would say, perhaps, you can...

Yes. I'm happy to elaborate a little bit further on that. The VEB is suggesting that this could boost the share price and make the share price even a stronger currency for this kind of merger and acquisitions. I do not necessarily -- we do not necessarily agree with that view as it is not uncommon in our industry if one engages in these kind of transactions that a mixture of cash and equity is offered to the target company. So therefore, in itself, to have some of these reserves that we currently have could be very helpful to structure such an offer without having to go to get additional debt into the company, for instance, which is, I think, a very good position to be in. So therefore, we think it increases our flexibility to have this cash balance with regards to restructuring of such transactions. I think that's important. And I think, therefore, that we have decided also on this reason that this is not a good idea to start paying dividends. Beside that, this kind -- the biotech industry is a fast-growing industry and needs a lot of cash. So yes, we are cash flow positive. Yes, because of our profitability and cash flow positive, we could absorb. If we have a target company that is not cash flow positive and profitable, which is very likely to be the case if they are in late-stage development, we could absorb the burn or partly absorb the burn of this kind of company. And then it's also very handy to have cash reserves at hand also to invest in premarketing activities, for instance, in such an asset that you would like to launch. Therefore, again, if you were to issue dividends, and basically, you would lose flexibility in the financing of such a transaction and with a possible consequence that you would have to go back to the market either for other equity financing or to raise debt for such a proposition. Again, it doesn't exclude that you would do that anyway, but raising debt with cash in the bank is always easier as well as raising cash without -- raising debt without cash in the bank, and I have a lot of experience with the latter, unfortunately. And therefore, I think the first opportunity is better. So again, I hope -- this was a bit of a long-winded answer, [ Mr. Kinar ], but we stick to our dividend policy. And we do not foresee any dividend payments in the coming years. I hope that answers the question. Paul, would you like to add something to that?

No. I think that it very well explained it. Thank you, Sijmen. Any other questions?

No. There's no further questions. I think that was the last question.

Great. So then it's my privilege to now close this meeting. Thank you all for your time and presence. I want to just say, as Chairman, a personal thank you again to Juergen, to Barrie, to Aad and Bruno for their incredible work over the past years. We will absolutely all miss you, but we'll say [Foreign Language] and not goodbye and hope that we all stay in touch. And we look forward, in fact, to meeting all of you in the very near future in person and especially in good health and fingers crossed again for getting together all next year in person. Thank you very much.