Good afternoon. Ladies and gentlemen, I am Richard Peters, the Chairman of the Board of Directors. I would like to welcome you to this annual general meeting of shareholders of Pharming Group N.V. I would also like to welcome our shareholders who are following this meeting through the live webcast. I'm sitting here to getting together today with the following non-executive directors: Deb Jorn, our Vice Chair; Barbara Yanni, Mark Pykett, Jabine van der Meijs, Léon Kruimer. Léon? Yep. Our CEO and Executive Director, Sijmen de Vries; our CFO, Jeroen Wakkerman. Our other non-executive director, Steven Baert, is joining us online today. The members of our executive committee are also present today, either in this meeting room or online. I'm also pleased to welcome the chair of our Dutch Works Council, Miss Xian Liu. Hi, Xian.
In addition, also with us today in this meeting room are Miss Louise Zwama, partner at our external auditor, Deloitte, and Mr. Paul van der Bijl, civil law notary and partner at NautaDutilh. As we are a global company, this meeting will be held in English. However, for the convenience of our Dutch shareholders, please feel free to ask your questions during the Q&A sessions in Dutch, and we will translate them into English when necessary. Please note that the use of mobile phones and recording services is prohibited. I kindly ask you to switch off your devices now if you have not done so already. This general meeting was convened in accordance with the applicable statutory requirements. The notice to convene was published on the fourth of April 2024, by way of an announcement on Pharming's website and a press release.
The agenda and all meeting documents were published at the same moment. As a result, valid and binding resolutions can be adopted today on all voting items on the agenda. All shareholders who are following the webcast have been invited to issue a proxy with voting instructions, either online to our company or to the civil law notary, Mr. Paul van der Bijl. The shareholders who are present in this room and who have not issued a proxy earlier, will have the possibility to cast their votes during this meeting. I will explain the voting procedure when we arrive at the first voting item on the agenda. At that moment, I will also inform you about the number of shareholders and shares that are represented during this meeting. These numbers are being verified at this moment.
You were all invited in the notice to convene to send us your questions on the various agenda items by email. We have not received any question in advance. In addition, the shareholders that are following this meeting online were invited to indicate also by email if they would like to ask their questions online, online. Unique login details have been submitted for that purpose. All shareholders who are attending this meeting in this room will, of course, also be able to ask questions today on the respective items on the agenda. For an orderly conduct of the meeting, we will first answer under each agenda item, the questions being asked in this meeting room. Thereafter, we will answer the questions to be received online.
I will invite the shareholders in this meeting room who would like to ask questions, to go to one of the microphones in the room when we arrive at the questions and answer part of any agenda item. Please raise your hand if you are not able to walk to these microphones, we will then come to you with a microphone in hand. For the minutes, I kindly ask you to state your name, and if applicable, the name of the shareholder that you represent before asking your first question. Finally, please limit your number of questions to three, to make sure that all shareholders will be able to ask their questions. You are, of course, welcome to wait again in line if you would like to ask additional questions.
A full audio recording will be made of this meeting to facilitate the drafting of the minutes by our Company Secretary . Within three months from today, the draft will be published on our website for your review. The final minutes will be adopted within three months thereafter, so by the 21st of November, 2024 at the latest. Ladies and gentlemen, I now would like to move on to the second agenda item, the annual report for the financial year 2023. This agenda item includes several sub-items. I invite our CEO, Sijmen de Vries , together with our CFO, Jeroen Wakkerman, to elaborate on the business, the operations, and results for the year ending December 31, 2023.
Our Chief Medical Officer, Anurag Relan, will also share some highlights of the launch process for Joenja, and an update on current plans and activities, including plans to expand development into new indications. Sijmen?
Thank you, Chairman. Ladies and gentlemen, I'm very happy to take you through the annual report of 2023, and the results in the business today. I would like to have the statement, forward-looking statements slide, please, as possible. Yes, thank you very much. Because we will be making forward-looking statements today, and those are for future expectations, of course, that are based on our current plans and expectations. And I would like to remind you, of course, that the actual results could very much different from those. So having said that, I would like to move to the next slide, and that tells you that... We are building a global rare disease biopharma company. And we are in the good position to be able to do that because of RUCONEST, to start with.
RUCONEST, of course, as you know, product from our own research, from our own, from our own platform, that came to the market already in 2014. Late 2014, it was approved in the U.S. It was already earlier approved in Europe, and as you all know, the business is mainly 97%-98% U.S. business, where we talk about here. And as you can see, and already have read, of course, we had a stellar year in 2023. Even after so many years in the market, RUCONEST still continues to grow very significantly, up to $227 million of revenue. And we still see till today, and you saw the results again in the first quarter results, that RUCONEST continues to grow.
It continues to grow both in terms of patients that are using RUCONEST and in prescribers that are prescribing RUCONEST. And it tells you something that in a market where many, many alternatives now are available, RUCONEST has a special place, a special segment, and I will elaborate a little bit on that later in the presentation. RUCONEST enables us to actually grow the company further forward, and we took the, now in hindsight, a very good decision, of course, back in the days in 2019 to in-license leniolisib from Novartis. And we're very proud, of course, that we were able to launch leniolisib last year, now with the brand name Joenja in United States, into the U.S. market.
You probably saw that within weeks from having the product approved by the FDA, the product was not only in the hands of patients, but it was also reimbursed. This is a testament to how effective the US organization is when it means to bring the product to the market and also get it commercialized and reimbursed. You saw the revenues in 2023, $18.2 million, another almost $10 million added in 2024. That brings the first full year in the market for Joenja up to $28 million of revenues. That in a very new disease, a disease that were only developed, that was only discovered 10 years ago, and where there is now already a disease-modifying drug on the market.
That is in itself quite a novel event, that something happens that quick. That means, however, that because we're dealing with an ultra-rare disease, that patient finding is a very important part of the equation of making Joenja a commercial success, and we will talk about that more. I will elaborate a little bit of that, and my colleague, Anurag Relan, will tell you more about that. In addition to that, recently, we got the approval in Israel for Joenja, and we have, of course, regulatory activities ongoing in Europe, United Kingdom, Canada, and Australia. In addition to that, the label is for children of 12 years and older.
We have a couple of pediatric studies ongoing that will bring the pediatric label eventually, and a clinical trial in Japan that will enable us in the not-too-distant future, and Anurag will elaborate on that as well, to actually bring the regulatory file to the Japanese authorities. Joenja, of course, is very important for the growth of the company and represents a near-term opportunity. In that respect, we're even more excited about the fact that as a next stage in further developing our pipeline, we found the possibility to actually formulate a second indication for leniolisib, PIDs with immune dysregulation beyond APDS, and we are preparing a phase two dose-finding trial. That is, of course, a significantly bigger indication than APDS. So leniolisib has all the signs of becoming a pipeline in a product.
Furthermore, to accelerate our growth further, we have a strong focus at this point in time on business development. We hired our new colleague, Alexander Breidenbach, last year, Chief Business Officer, and he and his team are making very good progress on looking for additional in-licensing opportunities or acquisition opportunities that have a clinical proof of concept or later in development to actually start or continue to accelerate the growth of the top-line growth as a company. You also saw in this slide that we recently decided to terminate the early stage, the very early stage, development of OTL-105, because we want to focus initially on the rare, on the late-stage opportunities that we have in our hands with Joenja, and that we can in-license or acquire.
For 2024, because of the strong, continued strong performance of RUCONEST and the continued growth of Joenja, we therefore, for the first time in our history, gave a revenue guidance between $280 million and $295 million, which represents a growth of between 14% and 20%. So we are well on our way with building that rare disease company. And this is, of course, a depiction of the pipeline, where you see RUCONEST in the market, Joenja in the market in the United States, where you see leniolisib ongoing regulatory reviews in the European Union, U.K., Canada, Australia, and it says Israel, but it's now approved, of course. This slide should be updated. And you see the pediatric trials ongoing for leniolisib in Japan and the pediatrics.
Then on the bottom, you see the phase two about to start for the PIDs with immune dysregulation. Before I go into the pipeline, I would like to talk to you about another opportunity—another possibility—another topic that is of importance, and that is the ESG program that we are engaged in. We have taken very significant steps in 2023 to embed environmental, social, and governance, or in short, ESG, in our strategy planning processes systems, in order to build and maintain a sustainable business. As the field is very broad, our ESG journey is centered around the European Corporate Sustainability Reporting Directive, or CSRD.
CSRD will be applicable for Pharming as of the financial year 2025, and we are on track to ensure a compliance with reporting requirements in accordance with the European Sustainability Reporting Standards. However, as a dual-listed company, we will also have to ensure compliance with the SEC climate disclosure requirements that are also expected to become applicable to Pharming as of the financial year 2025. So amongst others, we performed in 2023, a double, so-called double materiality assessment, according to the CSRD requirements. We also performed a technical gap analysis and an organizational readiness analysis. The double materiality assessment assists us to assess both Pharming's most significant impacts on people and the environment, and the most significant, sustainability-related risks and opportunities affecting Pharming.
On the screen behind me, you can now see the 10 material ESG themes that the board of directors endorsed for Pharming based on the outcome of that assessment. These themes are deemed to be the environmental, social, and governance matters that are most relevant for Pharming in view of our core activities as a pharmaceutical company. We are, at this moment, in the process of defining our specific ambition levels within these themes, including the targets and metrics for each of these material themes. We expect to be able to publish these targets and metrics later this year, following their adoption by the board. Assessing our compliance with European taxonomy requirements is another important priority for this year. In our annual report on the year 2023, you'll find a separate section on the ESG.
I invite you to read that section, if not done already, for a detailed outline of our existing and planned activities, and other initiatives linked to each of the components of ESG. In that section, you will also find more details on the double materiality assessment and the outcome of our earlier stakeholder analysis. Now, I would like to continue to talk about the pipeline. And of course, here I was already alluding to RUCONEST, the cornerstone of our development, of the development of our company. It remains the only recombinant treatment that targets the root cause of hereditary angioedema by replacing that missing C1 esterase inhibitor. And it's already, as I said already, for a long time in the market.
It was approved in the United States, late 2014, and it's well-tolerated, effective, and is, of course, indicated for acute treatments, which means that patients that are treating their hereditary angioedema attacks with acute medication only can use it, but also those patients that are under prophylactic treatment and who always, almost always continue to suffer from breakthrough attacks. Though, even with far better prophylactic treatments now, you know, breakthrough attacks occur in sometimes up to 80% of those patients, and in the best cases, up to 50% of patients suffer from breakthrough attacks. It is therefore mandatory for all the U.S. patients that are using prophylaxis to always have rescue therapy at hand. And that is where RUCONEST continues to fulfill its unique position.
You can see the efficacy numbers that are. You can see that there is no speaking of breakthrough attacks or rescue medication, which you see so often in other clinical trials about hereditary angioedema. That explains to you why there's continued strong in-market demand in the US. You see us reporting new enrollments of patients that were up significantly in 2023. That again continues to go on in the first quarter and are predictors, of course, for the stable basis of growth that RUCONEST still is for the company. You see the US revenue indicators, the leading US revenue indicators, active patients, vials shipped, physicians prescribed; it's all going up in the right direction. So RUCONEST continues to be the backbone of our company, and we expect it to be that for a significant period of time.
It is important also in the light of future developments, because there is, of course, continuing new competition come to the market. And most notably, there is now a, an oral acute medication that is currently undergoing a or will be starting soon, a regulatory review, we expect, and that could well come to the market. And it is important to realize that the patient population that actually uses RUCONEST has failed on all other medications. That means the, the products that are in the market that are not C1 inhibitors, and RUCONEST, remember, is the only C1 inhibitor, have all-- those patients have all failed before they moved on to RUCONEST. And that's a, a big contrast to, for instance, if you look at clinical trials with these kind of new compounds that use exclusion criteria-...
for the clinical trial for patients that have failed on previous, you know, kallikrein bradykinin inhibitors, the other mode of action. So it's an interesting observation that we make here, on our side, that we're serving a very special population in the market that cannot combine, on any of the other, of the other compounds. And therefore, we believe that the segment that RUCONEST represents, i.e., the very sick patients that have a high frequency of attacks, is a segment that is unique for RUCONEST and can serve- and where RUCONEST can serve the needs of patients, where those patients will very much likely fail. That is not to say that if these kind of companies, these kind of products would come to the market, that they wouldn't try it.
But we're very confident that we can continue to serve this patient population with their high unmet continued high unmet medical need with RUCONEST to manage their hereditary angioedema. So far for RUCONEST. So let's look at the first time of the market in with Joenja. Strong commercial execution, I already said it. You know, was $28 million of sales the first 12 months, and we continue to enroll and add patients. It's a new disease. There's no competition. It means you have to find patients, and we have already got 83 patients reported on active therapy by the end of Q1 2024, with five additional enrollments pending authorization.
It means also that we have more than 50 patients that are diagnosed of 12 years and older in the U.S. that are not yet enrolled, and 50, more than 50 patients that are pediatrics, that have not yet because they're younger than 12, that cannot yet get the benefit of Joenja, but have to wait for the pediatric approval. Now, as I was already alluding to the revenues, and the revenues will continue to grow as we expect to enroll more patients. And there are more patients. And we're talking about when we talk about patients, we talk about genetically confirmed patients with a genetic test. We have more than 500 of those patients that we are expecting in the U.S. on the basis of literature.
And we have already got more than 220 diagnosed, and of which 15 were newly diagnosed during the first quarter, including some of the variants of uncertain significance resolution. I'll talk a little bit more about that, and Anurag will talk in detail about the VUSs. So how do we find those new patients? Well, we find those new patients by continuing to offer the free genetic testing that we're currently offering to doctors who have patients that they suspect suffer from APDS. That's the first thing. Secondly, with the patients that we have identified, and it is a dominant autosomal mutation, so it means that there will have to be family members that also have APDS. We will offer them now, on a personal basis, our genetic counselors.
For instance, we'll go to them, and we'll offer them free genetic testing for their family. And I think that's important because there will be members that are in their family that have the disease that is yet gone not very well noticed or diagnosed. That's the first thing. And secondly, on the bottom of the slide, there's more than 1,100 patients that have undergone genetic testing because they had the symptoms and signs of APDS that got back a result that was a variant, so-called variant of uncertain significance. That means that the mutation is in the relevant gene, but the specific mutation is not yet associated with the hyperactive pathway that APDS requires you to have. That means that you need to figure that out.
That means it's a new disease, that you have to clarify the full breadth of the, of the disease, and that is the research that is currently ongoing. And that is when we expect in next year, in 2025, to have a full answer on the description of the disease, i.e., to have a percentage of those patients, and be able to diagnose them definitively as APDS. And Anurag will talk a little bit more about that. So in other words, if you look at that slide over here, you see how the cascade builds up. We currently have the label for 12 years and older. We found 220 of the 500 patients. We have 83 on active treatment.
We have more than 50 diagnosed, not yet enrolled, and we have the ongoing patient finding and family testing and VUS resolution efforts. Then subsequently, we have the global expansion for leniolisib following the regulatory reviews. Then we have the pediatric studies, where once we get the label, another 25% of patients will immediately become eligible. Then we already have found more than 840 patients globally, and we have, of those, 840 patients, we have 138 patients over and above the U.S. patients that are already on therapy, either via access programs or clinical studies.
And then, of course, as a big potential inflection point for the future to further accelerate the growth, we have the second indication, where a phase two dose-finding trial will soon start in this new indication, immune dysregulation linked with PI3 kinase delta signaling, similar to APDS. That, as you can see on the bottom, and it's not such a new disease, that's already well figured out, has a prevalence of at least five per million, so at least more than three times more than APDS. So you can see why we feel very strongly that Joenja or leniolisib represents a pipeline in a product. That is a good moment here to ask my colleague, Anurag Relan, to come forward and to tell you a little bit more about Joenja in the market. Anurag, please. Thank you.
Thank you, Simon. So let's continue the discussion about Joenja. Joenja was approved, as Simon said, in 2023 by FDA for patients who are 12 years and older with APDS. This approval was based on a randomized, double-blind, placebo-controlled study in which Joenja met both primary endpoints with significant efficacy results. It demonstrated significant improvement in other secondary parameters also, which I'll be reviewing with you. Importantly, there were no drug-related serious adverse events or study withdrawals in these studies. And on top of that, what we saw from the long-term use of Joenja from ongoing open label studies was similar results to what we had seen in the randomized study.
In addition, what we saw was that patients were actually able to stop the use of immune globulin replacement therapy, and we also saw a reduction in infections over time. These results were consistent with what we'd seen in the double-blind, placebo-controlled study, and we continue to collect additional data on long-term use of Joenja in APDS patients. But having a therapy for patients is not enough in the world of rare disease. Unfortunately, these patients often go on a long journey to get a diagnosis, so we're doing several things to help these patients arrive at the correct diagnosis. The first part is trying to educate physicians to think of APDS in the right setting.
So we're doing a lot of work here, and I'll be sharing with you some of the recent abstracts and publications that we have about APDS as well as Joenja on the, on the use in these patients. But as Simon said, the diagnosis of APDS is made through genetic testing, and we have, we have a sponsored no-cost genetic testing program now available in the United States and Canada for these patients so that there is limited barriers for them to obtain a genetic test. On top of that, we provide genetic counselors to help patients with the pre-test as well as post-test counseling that can be needed in these, interpreting these results. And then, because APDS is an autosomal dominant disease, it's inherited in families, we know that there are additional patients, likely undiagnosed, within a given family.
So we've also made genetic testing available to family members of APDS patients to assist them in getting a correct diagnosis. But unfortunately, this isn't the end of the story. A patient can go on a long journey, get a genetic test finally done, but then end up with a result which is inconclusive, and this is what Simon referred to earlier as a VUS, or a variant of uncertain significance. So in this case, the result comes back as inconclusive because the variant or the specific mutation that these patients have been found with has not been previously seen, and we're doing several things here to help patients arrive at a correct diagnosis. The first is that we're making available functional testing so they can actually have their pathway activity measured to determine whether or not they have APDS.
And then on top of that, we're actually doing a large-scale experiment whereby we're testing every possible variant or generating cells that have every possible variant, and then testing those cells to determine conclusively whether or not a given variant can cause APDS. We already know this is a serious problem within the APDS and in general, the primary immune deficiency community, because there are more than 1,100 patients that have a diagnosis of a VUS, basically a unconfirmed diagnosis, and they are stuck. They're stuck in limbo because they don't know what to do with this. The doctor doesn't know what to do with this. So we believe that by offering further results here and offering further testing, we will be able to help these patients arrive at a correct diagnosis, and we expect that many of them will actually turn out to have APDS.
We expect that these studies will be completed in the fourth quarter of this year, and you know, in early 2025, be able to report back to you on some of those results. So let's talk a little bit about some of the data that we presented recently at some medical conferences. But first, it's important to recognize, we talk about it frequently, that APDS is a serious condition. It's associated with a lot of morbidity and mortality, and so we did a study, a review, to see what the costs are associated with APDS. And as you can imagine, there are significant costs with the care associated with the care of APDS patients. On top of that, we've done a review of the mortality in APDS. This hadn't been done before.
People knew that it was a serious condition, but we went through the literature and found the actual mortality, and again, there is significant mortality associated with APDS. Most of that is actually due to the development of lymphoma. Frequently, these patients develop lymphoma and, as a result, have many complications related to the treatment of lymphoma. But unfortunately, many of these patients also die from other complications related to APDS, and that's one of the other bits of information that we're putting out there in the medical literature so that people know about APDS and know that this is a serious condition and demands treatment.
As I mentioned earlier, we also have long-term data on the use of leniolisib in these patients, and we've been publishing a good amount of this data, showing how patients' infection rates decrease, showing how their use of immune globulin therapy can also decrease. And we've been able to show, importantly, that some of the long-term complications are able to be stopped with the use of leniolisib, and we've been able to see that bronchiectasis, for example, this lung complication, doesn't worsen when patients are started on leniolisib. And then lastly, we shared some data recently on the use of the sponsored testing program.
This sponsored testing program has led many patients now to be able to have the correct diagnosis, whether it's APDS or some other condition, and this has been actually a very welcome program by the primary immune deficiency community. So that's a lot of the work that we're doing in terms of helping patients arrive at the correct diagnosis. Let's talk a little bit about other things that are going on with Joenja. In Europe, we are currently awaiting the CHMP opinion on our marketing application, and we expect to be on the agenda for an opinion later this month. So we're anxiously awaiting that. You heard Simon mention that we have now a marketing authorization in Israel, and that was just a couple of weeks ago that we received that.
We've also completed enrollment in our Japanese clinical study, which paves the road for an eventual application in Japan. We have several reviews ongoing still in the UK, Canada, and Australia, and these are all under review by the health authorities. Then there's two pediatric studies. Because we know that APDS begins really at birth, it's a genetic disease, we have two studies going on, the first of which is already completed enrollment, and this is in children ages 4-11. We have a study going on in children ages 1-6, which is continuing to enroll, and that first patient was treated just a few months ago, at about 6 months ago. Then you heard Simon mention that we also have expanded access programs.
These are programs whereby we make Joenja or leniolisib available to patients who don't otherwise have access through a clinical trial or through a commercial authorization. And then lastly, I'll be spending a little more time talking about this, but we're really excited about the possibility of using leniolisib in other primary immune deficiencies. And one of the things that we've learned in engaging with the immunology community is that there are other primary immune deficiencies that are similar to APDS. APDS really has two prominent features. One is immune deficiency, which I think is clear to understand, and what that means is these patients get frequent infections. But APDS patients also have what's called immune dysregulation, and that means their body attacks themselves.
So that's a form of autoimmunity, and you also see this in terms of the manifestations of lymphoma or some of the other complications that APDS patients experience. What we've learned from talking to the immunology community is that there are other patients who have a similar clinical feature set, similar to APDS, who could also benefit potentially from leniolisib. And what we see on the next slide is some of those clinical features. So on the right side, you see all of these features, lymphoproliferation, autoimmunity, the gut disease, the lung disease, infections, lymphoma. All of these things, again, are very similar to what we see in APDS, and we know that in APDS, that is driven through this pathway, what's called the PI3K pathway. And because of that pathway being overactive, we know that that pathway drives these clinical manifestations.
We also have another set of conditions, and you see some of those mentioned there, where there's also altered signaling. And because of that altered signaling, they also end up with the same clinical problems. So when we speak to doctors, and specifically, we talk to the doctors at the NIH, who were involved in actually discovering APDS, they said, "Look, we have another group of patients that we want to use and study leniolisib in." And they actually went on to... If you see in the next slide, you can see what that study design looks like. And this is a phase 2 proof of concept, dose-finding study, a single-arm study in 12 patients, where we'll be taking patients with other genetic diseases, but these are also other primary immune deficiencies with immune dysregulation.
We're taking those patients, and we'll give them three doses of leniolisib over a period of several weeks. And again, the researchers involved in this are the same ones that we studied that studied leniolisib in APDS. And they're actually, again, Dr. Uzel, for example, she is the one who discovered APDS ten years ago. She's also the one who discovered one of the other conditions mentioned here, CTLA-4. So we're talking really to the world's experts who came to us and said, "There's an unmet need in this other population similar to APDS, and we think that leniolisib is worth studying in this group." So, as Simon mentioned, we're in the process of getting that study underway and hope to be able to report on the study start and the first patient treated soon.
If we take on the last slide, what does this patient population look like? There's actually quite a number of these patients already described, and there are several large cohorts with each of these different mutations, each of these different primary immune deficiencies already described. These cohorts, when we add them together and think about the size, it actually is about five per million when we think about number of patients that could benefit from treatment with leniolisib that have one of these three conditions. So we think the opportunity is significant here, much greater than it is with APDS, but the unmet need is also significant.
And we have many patients and doctors, again, already wanting access for this, and so that's the reason that we're so excited about the opportunity to be able to start this clinical trial soon. So with that, I'm going to ask Jeroen to come up and continue.
Yeah. Thank you, Anurag, and, good afternoon. I'm very happy to take you through the financial highlights of 2023, starting off with the revenues. Revenues grew in 2023 by 19%, which was a result of higher RUCONEST sales volumes, supported by a price increase below CPI in the US market. In the US, the revenue of RUCONEST grew from $200 million to $221 million in 2023. RUCONEST revenues in Europe and the rest of the world increased by 12% to $5.9 million in 2023. The initial revenue of Joenja was $18.2 million, following the launch of the product in April 2023. The gross profit increased by $32 million to, or about 17%, which was in line with revenue growth.
You see a box of other income with a few elements. Well, the other income reflects the sale of the Priority Review Voucher to Novartis for a pre-agreed one-time payment of $21.3 million. And in 2022, the other income was largely determined by the reduction in the minority stake in our production partner, BioConnection. And at the time, we recognized a gain of $12.2 million. The operating expenses, or OpEx, increased by $64.5 million to $248.8 million, mainly in the category marketing and sales, in support of the commercial launch of Joenja in the United States. $10.4 million of those costs are attributed to a milestone payment for Joenja, following its first commercial sale in the second quarter of last year.
An additional $25.7 million in expenses is related to the research and development expenses for leniolisib, and marketing and sales expenses for Joenja. Our expansion efforts, driven by preparation for the launch and further commercialization of Joenja, led to an increase in payroll expenses of $24.2 million. Finally, on OpEx, we incurred impairment expenses related to our DSP production facilities, amounting to $4.7 million. The operating profit decreased from $18.2 million to -$5.4 million as a result of this increase in operating costs to build our Joenja business. The total net loss in 2023 amounted to $10.5 million, compared to a total net profit of $13.7 million in 2022.
This decrease was again primarily caused by higher operating costs, and in addition, fluctuations in foreign exchange rates adversely impacted the foreign currency results in the statement of income. This slide shows the longer-term revenue development at Pharming, with steady revenue growth until 2020, after which we saw the impact of Covid. We're very pleased with the continued growth of RUCONEST from 2021. RUCONEST revenue grew by 10% in 2023 to $227.1 million, and we saw record RUCONEST quarterly revenues in Q4 last year. Now, that's a record since the launch of the product in the US over nine years ago.
The Joenja is now driving enhanced growth, with $18.2 million in revenue in 2023, and overall, we achieved 19% revenue growth in 2023. Then moving on to the development on cash flow and the cash position. The combined total of cash and marketable securities increased from $208.7 million at year-end 2022, to $215 million at year-end 2023. The drivers of that were net cash flow from operating activities, and that was -$17.3 million, and was offset by incoming cash flow from investing activities, which was largely due to the sale of the priority review voucher that I mentioned earlier. Additional positive cash flow was generated due to favorable currency exchange rate fluctuations.
Hence, we ended the year with a positive cash position of $215 million. For 2024, we've given the following guidance. Externally, the revenue guidance for 2024, we have provided externally earlier this year, is a revenue growth of 14%-20%, i.e., we expect the revenue to land between $280 million and $295 million. We have also said that we expect RUCONEST revenue to show low to mid-single digit growth. So for RUCONEST, low to mid-single digit growth, and that guidance is still valid today. Other key assumptions on the guidance is that we expect quarterly fluctuations and Joenja to be a significant driver of growth.
The key Joenja assumptions is that we continue to see growth in the patients on therapy, which you have witnessed in the Q1 of this year... and the U.S. pricing is at an annual cost, the WAC of $566,000 per patient per annum. With that, I would like to hand over to Sijmen de Vries for the outlook for 2024. Thank you.
Thank you. Thank you very much, Jeroen. So yes, the last slide, for this part of the presentation, the outlook for 2024. As you heard, we for the first time given guidance on revenues, and Jeroen explained to the details along those. You heard the important progress and the continued progress that we think about finding additional APDS patients, namely via the sponsored program, the family testing, the VUS validation efforts that will come and subsequently will convert those patients, to paid therapy, with towards the end of the year, the outcome of that recombinant, that recombinant act...
That's not that in silico expert that in silico experiment that will clarify the full breadth of the disease, where Anurag was referring to, which means that we can expect a very significant bonus of patients in the subsequent year, 2025, to add in the United States and to the rest of the world. Also, you will see that ex US, increasing revenues are to be expected from the commercial availability through our named patient program, where patients in Southeast Asia are benefiting from, in the Middle East are benefiting from, and also patients in the European Union. In certain countries, there is paid early access programs that are running, and other funded early access programs in those key global markets.
The completion of the leniolisib clinical trials to support the filing in Japan, we were alluding to earlier, and the pediatric trial that will start reporting very likely somewhere in the beginning of next year, the first pediatric trial that Anurag was referring to. Then, of course, we expect regulatory actions in the European Union, United Kingdom, Canada, and Australia. And then, of course, Anurag was referring to the fact that we will start very soon the phase two clinical trial for the subsequent indication for leniolisib, which could mean a very, very significant inflection point in the future. And last but not least, Alexander Breidenbach's team is very active in the search for in-licensing acquisition opportunities that have at least clinical proof of concept.
It means they have at least a clinical proof of concept in patients or are further in development stage towards commercialization, to leverage our commercialization infrastructure and to further accelerate the growth of the company. You can see we're investing, continue to invest very heavily this year, and not only because we are in launch mode with Joenja, but also we are expanding the indications for Joenja, and we continue to find those patients. But you can also see that the increasing revenues of Joenja that we expect, and you can see the level of operating expenses, that the company is on a very healthy growth trajectory for the foreseeable future. Thank you.
Thank you, Simon. Thank you, Jeroen. Thank you, Anurag. I would now like to invite our shareholders in this room to ask their questions regarding this agenda item. Please go to one of the microphones for that. As mentioned during my opening remarks, please state your name, and if applicable, the name of the shareholder that you represent before asking the first question. Please do not ask more than three questions at the same time. Are there any questions? First question, please state your name and shareholder.
Yeah. Good afternoon. My name is Keyner. I speak on behalf of VEB, Vereniging van Effectenbezitters. I've got plenty of questions. Two questions concerning the products, but I will ask them in the second round, if you allow me to, Mr. Chairman.
Of course.
The first questions, I would like to raise the two elephants in the room. The first elephant, as we all know in here, is the still very disappointing share price development. We are happy at least to see that Mr. de Vries shares our concern and that he even is expressing his frustration very loudly in the last year. Now, the relevant question would then be: if you're so dissatisfied about the share price performance, is that due to the other potential shareholders are ignorant? For sure, it's not us here, because we did invest in Pharming. Is the rest of the world, are they crazy? Are you lacking in communicating your strategy and your results in a not so positive or constructive way?
Or are you communicating it very effectively, but the market doesn't believe you? So I was wondering what your assessment is of that situation, if there's anything you can change regarding that one. That will be the first question. Shall I continue, or you want to-
Why don't you give us the second question, and then I'll open it up?
Yeah. The second elephant in the room is, of course, the refinancing of the convertible.
Yeah.
We all know that. I can imagine that sometimes you have to do something which is, which seems negatively on the short term, but which will make us all very happy in the much, much longer term. Share price... Well, the, the interest rates have gone up, so obviously, if you're refinancing something, you pay more interest rate. Unfortunately, also, the strike of the convertible has gone down, so it's much more likely that there will be more shares if you- if this will be exercised in the end by the- by the bondholders. The market reacted very negatively. So again, that's similar to the first point. Is there anything wrong with your communication in setting the expectations right in the market, so the market isn't surprised by these kind of relatively bold moves?
... That will be the second question. The third question, and that's something which I applaud. You've got something within your board of directors, a transaction committee. Very obviously, you want to move beyond having two major products, even though the second product may be a pipeline in itself, but we have to wait and see. But, have, has this transaction committee refused any suggestion of Mr. Simon de Vries as CEO in the past year? So I'd like to know, maybe he's too optimistic, too aggressive, and you're putting your feet on the brake, or is the other way around, that there's nothing to be found, so far there's nothing to be approved or disapproved? Thank you.
Thank you for these three excellent questions. Regarding the share price and question about our communication strategy, Simon, do you want to address that?
Yeah, Mr. Keyner, of course, I would like to address that. Indeed, I agree. If you look at the history of this company, of course, you know, we were very much in survival mode for a long period of time. I don't need to remember you of that. Then the company very quickly became very profitable. Then, of course, we started to invest quite heavily in our new product, which of course is a necessity if you want to continue to accelerate the growth and de-risk the company. However, you know, when your profits go down, that's often not very well understood. That's the first thing, and I think that is one of the things that continues. I also see a lot of people asking questions about the level of our operating expenses.
Of course, that we have become a loss-making company in 2023, and we don't give any guidance this year on any profitability. This comes with the part, and again, that you have to invest into the future and investing in launches of products. And it tells you that commercialization is a very expensive business. But investing in launches of products is always costing very much, a lot of money, and you will have to basically, you know, for lack of a better word, dig a hole before you get out of that hole because the product starts to perform. Leniolisib will perform. You can see it's already performing, but it will take a lot of investment.
That means that it's also difficult to understand, also in the context, and I think that's the other element here, is that ultra-rare diseases is even more of a challenge. Where in hereditary angioedema, we have a lot of competition. We have no competition in APDS, but we have to find the market. And that takes money, but it takes also time. And that's the other element, I think, that the market is always looking for more and more quickly. And here, in an ultra-rare, the market doesn't have to... doesn't sort of believe the story yet, I think, and believe is maybe not the right word, but doesn't perceive the story yet. And so I think we are very confident, and we also know that there is quite a few of institutional investors already invested in the company.
You saw one of them sticking up above 5% briefly last year, which was a quick sign of confidence, and they quickly built a position in the market. But we also know that quite a few of these names are below the 3% thresholds. You don't see them because they're still sitting on the fence, for lack of a better word. But we do get a lot of traction, and I was, again, last week on the road show in New York, where most of these investors are after the first quarter results. You see a lot of traction with the institutional investors, but traction and actually, you know, picking up the shares is, of course, a different thing. So the market is impatient. It has not got a lot of patience, but you need a lot of patience.
But we are very confident in the growth story, and yeah, we are all depressed.
Communication strategy or could we do better? By the way, I always think we can do better. So I agree with you, and we're always constantly in a learning, learning phase and trying to do better. So with regard to the refinancing of the convertible note, I will tell you that, you know, we were all involved in this decision. We knew it was not going to be an easy thing to do. But we are thinking long-term about building value for the company. And by strengthening our cash position, it allows us, over time, to really look at... And we should go back to your third question around the transaction, to look at potential targets and pull the trigger whenever we're gonna be ready for that opportunity.
So it was a matter of, like, figuring out how do we position the company for optimal success, not necessarily short term. We could try to manage the company on a weekly basis, on a monthly basis for the share price, but our role as a board is to really manage the company and work with the management to put the company on a track for long-term value creation. I don't know if Jeroen or Simon wants to comment on the reaction of the market to the convertible notes?
Yes, so share price has been...
You agree?
Yeah, so share price has been indeed going down for a while now. And in that period, we also issued the convertible bonds. We had expected a short bounce of the share price, which is normal for convertible bond transactions, and we saw that as well. Yes, so you said, you mentioned the dilution, and that's indeed because of the parameters of this transaction. The premium or the conversion price is lower than it was, the one from five years ago, and that's just basically reflecting the current status of the market. So there's nothing we can do about that. That's basically what happens. But overall, we're very happy that we safeguarded the balance sheets, that we secured funding for the next five years.
If you look at the cost of this transaction, the coupon of 4.5%, that is very competitive. If we had done different ways of refinancing, it would have likely been much higher cost.
... Thank you. The third question?
I'm gonna go now to the third question, which was the Transaction Committee and whether we have refused some proposal or presented Transaction Committee. We do have the chair of our Transaction Committee here, Barbara Yanni. I'm gonna let you comment on that.
Yes, thank you very much for that question. I think I can tell you, we look at transactions very carefully. We have a strong group within the company that filters, looks at transactions, filters them down to something that would be interesting. It's, you know, I have a long history of being in the business development world, and it is very, very hard to find appropriate transactions. But to your specific questions, have we turned down any of Simon's ideas? No. Maybe some people on the other side have turned down our ideas of how much we're willing to pay or whether how we might wanna structure a transaction. So I think, you know, we look carefully. I can tell you that we want to find appropriate transactions. They're hard to find.
There's a lot of competition for products or potential products that might be out there. I feel good about the process, and I don't think we've missed anything that we could have done, but we will keep our eye on what's out there.
Thank you. Let me applaud a kind of mentality of not overpaying out of a kind of desperation.
Yeah.
You know, that's much better even than I do, at least I hope you do, that the biotech sector, big tops and very deep troughs as well. Of course, timing that one is a very delicate matter. It's better to be a little bit more patient and then take the step if it's appropriate, instead of you feel the pressure of everybody. You need to make sure you got three, four, five products and license and whatsoever. Maybe that will boost the share price, the risk of overpaying, and that's, that can be a big burden, indeed. Thank you very much.
Well, thank you for those comments. Again, it resonates what I was saying before, is that we're looking to build value long term, and we can afford to be patient because we've strengthened our balance sheet with the convertible note. Are there any other questions in the room here before I go to online? Please state your name and your affiliation, please.
Yes, good afternoon. My name is Joris van der Louw. I have a couple of questions, which I'd like to ask. But first of all, congratulations on the approval of the country Israel for Joenja. Very nice to hear that. Last year, the Pompe research was stopped. Does it also mean that Gaucher and Fabry will not be started up, or this is also stopped with that?
Thank you for that question. Simon, do you wish to answer?
That's correct, Joris.
That's already a competitive market, the Pompe market. Is that the main reason or is a more technical reason for stopping this research?
Both.
Both. Ah, okay. Then, a Q&A question on the RUCONEST revenue. There's a population using RUCONEST as their first medication, and there's a part of the patient population that uses RUCONEST as a C1 on demand . Can you tell anything on the percentage of these populations, and their repeat sales? Does someone who has C1 on demand buy every year, or once or twice, or how does this work?
Simon, do you care to answer?
Yes. So obviously, on an anonymized basis, we can follow patient journeys. We do not know, though, how or in what context the patients are using the drug, right? So if you think about U.S. patients that are either on acute only or also are on prophylaxis, we do not know that. We, however, see that we are serving the average use of RUCONEST per patient is much higher in RUCONEST than we see in all of the other products. And, in combination with the fact that all patients that are on RUCONEST failed all other therapies, you can see why we are a very special segment of that market, that actually where patients do need to use RUCONEST.
So the other treatments, and we said this many times before, the other treatments that are on the market are much more convenient, right? They're oral sometimes, or they're subcutaneous, but RUCONEST is the one that they are relying on because that is, basically speaking, the missing protein that they are replacing, and therefore, you know, you see the results. It doesn't come that much closer to 100% than you see with the RUCONEST clinical trial results. Hence, why RUCONEST continues to play that very special role in that segment. Plus, we see...
We think we see, because we never know for sure, as I said before, that we see patients that are using less RUCONEST less frequently, and we suspect that we are also making more and more inroads in the segment of breakthrough medication, especially in the context we think, and we don't know, that could be the case where, for instance, an oral prophylaxis entered the market, where there is significantly more breakthrough attacks than on the break, on the normal gold standard, TAKHZYRO, for instance, that is in the market for prophylaxis. So in other words, we do not precisely know, but we have our suspicions in combination with that they all failed of everything else before they went to RUCONEST.
All right. I didn't know that, you're not able to make a distinction between the patients.
Your third question?
Yes, on the first indication or study or yeah, patient finding that has been done. What is the process for the FDA to approve this or because it's not in the pipeline as a study, for example, so?
So, you're asking a question around the life cycle management of Joenja, which Anurag mentioned.
Yeah, for the first part. So there's 1,100 possible patients, and when are they-
Right.
Is it okay by the FDA? Is the letter or, yeah, how does it work?
Go ahead, Anurag.
Yes, so for the patients who have this current VUS result, it is basically an inconclusive result, and we are doing further testing to be able to categorize those patients as having APDS or not. So once they are diagnosed with APDS, then they fit under the current label, so there isn't any additional clinical trial work. And that's why it's not listed under the pipeline segment, because they're basically a group of patients who don't have APDS yet, but in the future, with further testing, may be diagnosed with APDS correctly and then be eligible for treatment.
All right, thank you.
May I ask, before you ask an additional question, may I ask to see if somebody else has any questions? Just want to be fair. Yes, there's somebody behind you.
Yep.
My name is Van Riet. I'm a private investor. You do testing, but I get the impression that you are paying for all the testing. The patients aren't paying for the tests, so that must cost tens of thousands of euros.
Is the tests are paid by us. That's correct. The genetic tests, and the gentleman suggests that that costs tens of thousands of dollars. No, that's not correct. $200 are the costs for the tests, which we indeed carry. So $200 per test.
You have other question?
Yes, I have two more, if I may. Yeah, one is on the OpEx, also I kind of refer to that. What we see is as there's a lot of cost involved in investing for a new product. How does this work in future, Europe—we are in the, you are in the U.S. market now. European market might be opened this year, some, does that also mean then there's more investing needed, also for Japan or rest of the world? Are you keeping on investing for the next couple of years?
Simon?
Yes, to a certain extent, of course, yes. First of all, it will be market by market in most cases, right? Because reimbursement will take considerable times in some markets and somewhat shorter in other markets. Then the level of investment will be significantly lower than in the US market. We already have a great deal of infrastructure on board with regards to the European markets. We also have the odd person in even in Japan for the clinical trial and for the patient finding going on already. We also have one person employed in Australia already for the same reason. And for Southeast Asia, serving Southeast Asian patients, finding activities where they are on either of these early access programs, either paid or not paid.
So, there is already a lot of this activity going on. So in other words, investment continues. Does investment significantly increases going forward? We do not expect that. Jeroen also gave some guidance on that in the first quarter results, or and at the year-end last year as well. But it is a story of investing, but you also see that the, when the sales grow, you can very easily see that we very, you know, in the very near future, will become a profitable company again.
Yes, and then, in respect to new licenses, does it mean that the investing part will be 30% lower because you already have more infrastructure available? Or does per license you need to invest just as much as now with the Joenja?
Are you talking about licenses of line extension of Joenja itself in other indication, or are you talking about other product?
New in-licensing of a product in-licensing of new products, I mean. So would that be the same investment amount or... Because as an investor, I'm looking at the company. Oh, yeah, there's a lot to be invested there. If you buy, after we buy, let's say, a license for 2, you need to invest 10.
Right.
With a new license, then, do you need to invest six or
Jeroen, answer ?
It depends entirely on the situation, obviously.
Mm-hmm.
As you saw with Joenja, we added another sales force, but the supporting side of the US organization, which was the majority of our colleagues on board in the US-
Mm-hmm
Did not have to be significantly expanded. So in other words, it's a very scalable model that we have, and that's the beauty of operating in these rare diseases, because it's very scalable. Every time, let's say you add a product, you add, for instance, a sales force in the US, and Joenja sales force is 24 + 3 sales leaders. And Anurag gets a few other medics on board as well, and maybe the odd marketing person. Now, I'm simplifying it a little bit, but it means it's a very scalable model.
Mm-hmm.
You can see why, you know, adding on another product will indeed bring on, by the time that product comes to the market, will indeed bring some expansion to the organization, and ditto for the other markets where you are commercializing, but not so much in that respect.
It will put the product in the bucket of the salespeople already there.
Yeah, of course. Before that, you do an investment in clinical trials, of course.
Yeah. Yeah. Yeah.
There is someone, there is a gentleman right behind you. Is that, I think he wants to ask a question. No?
Yeah, but,
One more, last.
Short last question.
Okay.
Because, well, at Joenja, I'm quite amazed by the new indication, the possibilities, if you look at statistical numbers from research done.
... Then almost the term blockbuster comes to mind for the product. If there's thousands of people and if the price is at the level or almost the same as in the U.S. for Europe. Are you thinking as Joenja being a blockbuster in the 5-10 years?
I can answer that, and then you can answer. So I know a little bit about rare disease, I run the global rare disease business at Genzyme. This is interesting about rare disease. You develop a drug, and then all of a sudden you start finding patients that can become more and more eligible for the drug. So when I actually was looking at joining the board of Pharming, I was very interested in the Joenja opportunity. We talked about this because I saw it as a pipeline within a drug, which I think you picked up on.
Whether we will reach blockbuster level or not, we don't know yet, but I think, investing right now, going back to the earlier questions, investing into the product, in doing life cycle management, not only in terms of testing, but also looking for adjacent, what we call adjacent indications, is the important investments that we have to make for the company.
Okay, thank you. Lots of success.
Yes, sir. You're bearing gifts.
A little gift, yes. Can I put it first in front of you?
Thank you, All. Thank you very much.
Thank you for the applause, but I don't have a question, but I want to say something. If you don't mind, I will do it in Dutch. We are a Dutch company. We are beside Dordrecht, in a nice place here at Leiden. So, if you don't mind, in Dutch.
Netherlands. So at the beginning of this year, we were made happy. You gave us an update. And I thought to myself: Simon, you are a humorous kind of guy, $280-$295 million? You have a sense of humor. You're only talking RUCONEST. But we saw the figures for the first quarter, and I believe... Well, I have to be honest, I'm very disappointed. Now, it is very strong that that you are behind your team, that you are behind your company. And that you give us guidance, and you gave us the figures for RUCONEST. And at the beginning of the year, we had the update, and we thought that RUCONEST is a fantastic product. It is out there, people understand, and that is why I gave you the flowers.
It's for your team, and there are three feathers in it, and they're by a peacock. You can use it as a metaphor, but I put them in the flower, and for me, they represent the hereditary angioedemas and APDS, and a month from now, the PID. So your three major drugs, when it enters phase two. I could add two feathers in your cap, the VUS that you will have at the end of the year. Really, it should be above PID, because it's going to be a big boy, I believe. And then in the third quarter, you came up with the in-licensing story. We could add it up, so five feathers in total. How about that? But those five feathers, or three that we have right now, should be fully used for your patients. As a shareholder, we have to be patient as well.
Ryan, now, right now, it's difficult to stay above the $0.80 threshold or cutoff point, so they represent patience. I, I want to bow to you, bow to your patience, that you have to exercise, to talk to all of the bodies and, and work with them. I don't have to name names, right? I'm curious to learn. Maybe next week, you get the bill. There will be $10 million on that bill. Will you just add a PV to it, a profile of sorts? It's a PV, is a priority voucher, of course.
Yeah. So thank you, Al, Rene. So for those of you who are online who don't understand Dutch, this is a very nice gift from one of our shareholders, presenting us flowers for the team, thanking us for our patience, but we also thank you for your patience.
Yeah.
Because it's, you know, rare disease, it takes time to build-
I, I-
to build a business.
I know, and of course, you have the cost before you have the income, not the other way around. But it's disappointing here in Europe, of course, for sure. But that's what I wanted to share with you. But let's add positivity. We can all use it.
... There's one more question in the room? Yeah.
Yeah. After all this positivity, maybe a few more comments from my side. My name is Marcel Keyner. I speak on behalf of VEB. I've got two questions concerning your products.
Mm-hmm.
The first one concerning APDS. You've been writing, but also presenting today, that there may be similar diseases which may give similar or even much larger, even not similar, much larger opportunities for your, for your product in the, in the future. Now, I've been an investor in plenty of biotech companies for the last more than three decades, not in pharma, you're not allowed to, maybe otherwise I would. And what I've learned from early experiences. I know Mr. de Vries knows exactly what I'm going to say right now. From early experiences, I can say that all of the companies who had one successful product, for instance, in autoimmune diseases, like, I don't know, multiple sclerosis, is very, very similar to RA or CU or the Crohn's disease.
So far, I've always been very disappointed in the fact and to the degree, to those companies being able to address those kind of different markets, even though the diseases have got lots of similarities and so on. My question to you is, to what degree are those APDS family members very different or more similar than the examples I've been seeing in the past three decades? That will be the first question.
Anurag, you want to answer that question?
Sure. It's actually a very good question, and when we looked at the spectrum of opportunities with leniolisib, there was so many different choices. There were autoimmune choices. Novartis, at one point, was thinking about rheumatoid arthritis. We really tried to focus and look at targeted therapy, right? So we have targeted therapy for Joenja in APDS, and what we said was, where else can leniolisib be rationally applied, where it has... You know, this class of drugs hasn't been evaluated before, or it's not just some large disease like inflammatory bowel disease or rheumatoid arthritis. And what we found was that, again, led by the immunologist who came to us, so not, you know, not our team even looking at this, they said there are these other primary immune deficiencies that have a similar immune dysregulation phenotype. That's number one.
So the clinical features are the same. Number two, they measured the pathway, and they see the increased activity of that pathway. So if you remember the name of the condition, APDS, is Activated PI3K Delta Syndrome. So these other patients also have that same type of activity in the pathway. And then number three, they use medications like they used for APDS in these patients, too. Not successful, not great success, because of the tolerability of those medications, but they tried to control it in the same way. So together, all of those things suggested to us that there was a real opportunity here, and that it's probably not the type of risk as going into oncology or going into rheumatoid arthritis.
That's one of the big reasons why we said, "Okay, this is a well-defined population, and it's a, and we're using a targeted approach to control that pathway," and which gives us a lot of confidence in trying to, you know, conduct this study. And I, and I mentioned in our, in our quarterly call, too, is that this is the second indication. There is a third also that we're still working on. We haven't disclosed it yet, but, you know, I hope to be able to do that later this year with even, again, same type of, scientific rationale.
Yeah. I have to disappoint you. I'm not a doctor. I'm an engineer. Nobody would believe it, but actually, I am an engineer. I cannot judge whether pathways and so on is relevant. I have to believe you. Maybe to put it in layman terms, is it correct to assume that the family ties between the APDS, similar diseases, that the family ties are stronger, more stronger than they are between RA and multiple sclerosis and CU and so on? Is that a correct assumption-
I think-
... in layman's terms?
I think that's true, but I think what's even probably more important, to answer your question, is conditions like rheumatoid arthritis, inflammatory bowel disease, they're much, much more complex in terms of our understanding of them. There's so many other factors, so many pathways involved. Here, we're talking - We think that we have a better understanding of what leading-
Okay
... inside the cell to the clinical part. That's really, I think, the answer to your question.
That's, that's an answer which even an engineer understands. Thank you very much. I've got a second question, Mr. Chairman-
Yep
... if you allow me to. That's maybe also something which you tried to answer of the previous person, well, not the one with the flowers, this person here. It concerns Pharvaris, yeah? And you already explained in your presentation there's lots of competition, but somehow RUCONEST seems to survive and needs-- Well, you're capturing your market share because you're by far the most effective, not maybe the easiest to apply, but the most effective treatment you can imagine. So this kind of market share is more or less protected. What makes you think that Pharvaris is similar to the other competitors who are already on the market?
Anurag, do you want to answer that question?
Sure. So the drug that Pharvaris is developing is called a bradykinin B2 receptor antagonist. It's an oral bradykinin B2 receptor antagonist, but there's already another injectable bradykinin B2 receptor antagonist on the market, and it's been on the market for more than 10 years. That is a product called Icatibant. The trade name is Firazyr.
...That product, and as Simon mentioned, many of the patients, if not all of the patients who use RUCONEST, have already tried that product.
Thank you.
The reason that they use RUCONEST is primarily because of that efficacy or the lack of efficacy they see with that product. Nothing wrong with that product. It works great for most patients, but for many patients it doesn't, and this oral product is just a new version of that injectable product, but it has exactly the same target.
Yeah. In addition, let me, as an engineer, add to that for the other people who don't know anything about medicines. Normally, usually it is that oral medication is less effective than when you do it by injections and so on. It goes directly into the blood, so by definition, it's unlikely it will be more effective than the one which already exists for 10 years. That's correct?
I think that's a fair general statement.
Thank you very much.
All right, are there any... Oh, there's one more.
I'm Jens van der Heide . Mister, you gave an outlook of the total revenues, but you give not an outlook of the total costs, and costs are easier to manage by you than the revenues. So why don't you give an outlook about the cost?
Thank you for the question. Simon or Jeroen? Jeroen?
Yeah, thank you for the, for the question. So, so basically, we did give some guidance in earlier calls, and, and that was along the following lines. Last year, in Q4, we had a big increase in cost. It was $73 million in the fourth quarter, and what we said is we will not repeat that. So on average, the cost on a quarterly basis in 2024 will be below that $73 million-dollar level. How big exactly it's gonna be, we don't know, but we are managing towards that, towards that level. So not to get above $70 million per quarter this year on average.
Are there any other questions here in the room? Couple, couple more people. Yeah. Please, go ahead. Van Riet is my name, particulier.
My name is Van Riet, private person. How do you recruit patients? Are they referred to you by a doctor, or can they just sign on online, for example? 'Cause you were saying that they sometimes change medication. Does a doctor need to give a prescription for that, or can you as a patient or a private person just use the drug for $550,000? 'Cause I think first, probably you need to have the disorder, right?
Translate it, and then, and then answer the question.
Yes. So, the question is, how does that work with, you know, Joenja patients, right? I assume you're asking. Is there a prescription necessary or can you just get the drug? Well, there is, of course—first of all, there is, a genetic test that has to be confirmed that you have APDS, and this hyperactive pathway. Then, of course... And this is done by highly specialized doctors. Then, of course, there is a necessity for a prescription, and that prescription then will go, to an insurance company and will have to be approved. And you have seen that we have a very high rate of approval for those, prescriptions. So it is on prescription only by, highly specialized doctors. I hope that answers your question.
Next question. Yes.
Hello, I'm Jan Hoogeraad , shareholder from 2008.
Hi, Hogeraad.
So my patience is enormous, but I hope one thing, and I go now to Dutch. Now that the share price is so low, I mean, you want to take over companies, you say. Aren't you afraid that someone might go after you? That you might be taken over yourself, because... 'Cause that is, that is my question, and that's what I fear the most. I've been, you know, sitting and waiting quietly for such a long time. So why... I mean, there's- there have been people here who, who've said, "Well, it needs to be more robust. The communication needs to be better." And I agree with that, I have to say. So how do you view that yourselves?
Jon, Mr. Hogeraad is asking, have we become, you know, with the low share price, are you not afraid you become a takeover target, and says that, you know, maybe we should communicate a little bit more robust about this, so to actually not to bring the share price up, I suppose, and be less of a target.
Amazon. Tesla.
So, can I answer in English?
Yeah. Oh, yes, sir.
So, takeover target, any company can be a takeover target, and we don't comment on, you know, these kinds of things that could happen or not. We want to build a sustainable, independent, rare disease company. Everybody in this room here, that's what we want to do. We are an independent rare disease company that now has a portfolio of products, with two products, and we intend to expand on that. So then comes the question of the share price, which was already asked earlier. It is a subject of frustration for all of us. But at the same time-
...We have to build the fundamentals of the business. And as we prove that we can actually execute on the fundamental of the business and build a diversified, premier, rare disease company, then eventually the share price should follow. When will that happen?
I-
If I knew that, I would, you know, I would be buying all the companies in the world, because you cannot predict the markets. The best thing we can do here is to run the business as disciplined as possible, build it for a long-term potential, and then over time, communicate constantly. We also want to make sure that we don't overpromise. Some management teams and some boards get so desperate, they start overpromising, and then, you know, that's you can run into real, real problems by doing that. So I think the way we've been running the company, both as management and as a board, we've been very, very, respectful of our shareholders and of the, the rules and regulations.
Why I chose you as my investing
Thank you.
You have profit.
Yeah
A product, you have, well, okay, losses this year, maybe. And you, yeah, you have onset, and that, that's the three things I believe in, because I'm also, I've, I'm holding by myself. But I have one question to Barbara, or to all of you. You are looking for new indications, but you say, "No," you have $100 million, so,
You say the loan has been $100 million, you've got money in the bank. What is the amount of indications you're looking for? Is it $10 million, $20 million, $500 million? You never really say that. And let's say you were to have an indication right now, and you'd need to pay maybe $400 million, then you've got a huge dilution.
That's maybe some of you, 'cause I understood that. So the question was, well, you know, you've got this convertible note that we did, and then we're looking at potential acquisition. What will be the size of these acquisitions? Is it $10 million, $20 million-$40 million, $400 million? We have a clear strategy of what we're looking for, led by the Transaction Committee, and we've given that the guidance to our management team. It is based first on the quality-
Yeah
of the asset.
Yeah. Understand.
Right? And then once we find assets that of high quality that we think would fit well within our portfolio, within the company, then we look for a price that would be acceptable to us. And as you heard from Barbara, it may be acceptable to us, may not be acceptable to the other party that wants more. So we're being very disciplined about that. As far as the size, you know, that remains to be determined based on the opportunity.
Yeah.
Do you want to add anything to this?
No, I think this, to summarize it, and, of course, it's all rare diseases, right? You have to realize that as well.
Yeah.
On the other hand, there, as Barbara is alluding to, there's a lot of competition around always, and they sometimes pay crazy prices.
Yeah, but I hope that you not pay crazy prices. Yeah? And for...
Thank you very much for the past year. I thought it was very exciting, and it's gonna be another exciting year, I think, but certainly, thank you very much for the past year. You're very welcome.
Mr. Chairman, Keno VB, I've got one more question based on your earlier response. One advantage of being here, I think, for the 21st year or so, I skipped maybe 1 or 2 years, but mostly I've been here during all those difficult times as well. But I do remember Mr. Simon de Vries very clearly explaining your strategy, your, your, almost like a religion, about being taken over or not. And I remember very, very clearly his explanation was 2 and 3, and 4 or 5 years ago. Every year, he repeated the same story for similar questions like the previous gentleman: "We are not against being taken over.
However, for us to be able to get a good price for being taken over, we need to build a portfolio bigger than one product." Now, I've been listening very carefully. I sense that maybe there's a nuance right now in saying, "We want to remain independent. Of course, we're on the market," but has anything changed as far as that is concerned, that you're saying, "We want... Our goal is to be-- to remain independent, to build our own portfolio, to keep our future in our own hands, and it will be very unfortunate if anybody would take us over-
No.
for any price?
I didn't say that. I said-
Okay.
I said that we want to build an independent company. Companies are not sold, they're bought, right? And so our goal is to build the best company possible. We also know, as a board, that we have a responsibility to maximize shareholder value. So if somebody were to decide to make a play for the company that makes sense for our shareholders, we would have to look at that very carefully. But again, companies don't get sold, they get bought.
Mm-hmm.
Why do they get bought? Because they build the quality.
Very clear.
Okay.
Thank you very much.
Good. It doesn't look like there are any more questions here in... Oh, there's one more in the room. Yes, sir.
I'm also going to be speaking Dutch since that's easier. I've been here since 2011, so not that long, but still. In view of my, the people behind me, it's a large group. The question is, you know, was it a rebound new, because of the convertible instruments, and it was expected to go down. And my question is, over what period this year will there be a rebalance upwards? Or do you not know? And I'm asking that because I have quite a lot of people behind me. It's a short question, and of course, no one can predict the future, but still.
You translate and then-
Yeah, the question is whether we expect that the share price that has been hit by, let's say for instance, market conditions, but also with a convertible bond, because there were also very negative market conditions for the entire biotech sector recently. That, whether we expect that to be over now or to continue. And of course, Mr. Vergouw, that is very difficult, as you know, to predict. We, of course, believe that once we continue to execute on RUCONEST and Joenja, that the market will catch up eventually. When that will be is, of course, not very clear, because otherwise we wouldn't sit here if we could predict share prices, right? Maybe, Jeroen, you want to add something to that? Oh.
Yeah, I concur. I concur with that. And, the normal price reaction, the share price reaction to a convertible bond is over a week or so. So the market just needs some time to adjust to the volume that is created by the issuance of a convertible bond. That time is over now, so now it's up to the market to determine where the share price is going. But it's not related that much to the convertible bond anymore, normally.
Can you state your name as well for the recording?
Excuse me. I'm Shipson, and I'm Robert Vergouw.
Robert?
The fact is, for financial,
That fiscally speaking, it is still going up this year. Is that something you see as a fact or not? I get that question a lot, of course, from private investors, not from companies investing, because of course, in the Netherlands, we deal a lot with shareholder owners.
We cannot predict the share price, obviously. We have for this year, because you asked if this fiscal year there would be changes. We have half year results in August. We have third quarter results in October, so there's two opportunities. There's many more opportunities for shareholders to latch on to more positive news with regards to execution and all sorts of things you heard about. So we are optimistic about this, but we don't know is the answer. I'm sorry.
Thank you.
By the way, for those of you who might be listening online, if you hear a lot of background, I think the sky is falling on us. It's raining a lot here in the Netherlands, so if you hear some backgrounds, that's what you're hearing. Are there any more questions here? Yes? No. Great. I was also notified there are no questions online, so therefore, I would like now to close agenda item 2A, and ask Steven Baert, the Chair of the Remuneration Committee, to present to you the remuneration report for the year 2023. This report is included in our annual report and on today's agenda as item 2B. Steven?
Thank you, Richard, and good afternoon to our shareholders. Apologies for joining you remotely. My daughter graduated from university, and as a proud father, it's very important that I could attend the ceremony in person, so I trust you will understand my decision. On behalf of the Remuneration Committee, I will present to you the remuneration report of Pharming for the financial year 2023. In this report, the Remuneration Committee reports on how the remuneration policy for the Board of Directors was implemented. You will have noticed that the Board of Directors has submitted a new draft remuneration policy for adoption by our shareholders, and during today's meeting, I will come back to that under a separate agenda, item number three. The remuneration report was submitted for today's meeting, still covers the implementation of the existing policy in 2023.
The Remuneration Committee very much appreciates the highly positive advisory vote at the Annual General Meeting of last year, held on the 17th of May, 2023, where 95.05% of the votes were cast in favor of the presented report. And as such, I'm pleased to confirm that we have maintained the same template for this year's report and even added several other disclosures to ensure continued alignment with best practices and to meet feedback from shareholders and proxy advisors. For example, we included an explanation of changes made to the peer group in 2023 and an extended clarification of the reasons for the increase of the base salary of the executive director.
In addition, the vesting schedule applied for the short-term and long-term incentive plan to determine payout and vesting percentage for each of the quantifiable targets now include a threshold of 80% for each quantifiable target. Furthermore, the Board of Directors has undertaken action to ensure that dilution limits for Pharming due to the equity plans for staff and the executive director, will be prudently applied, and that in any event, grants of equity or equity rights under these plans will not result in Pharming exceeding 10% of all issued and outstanding shares of Pharming on a diluted basis. Last but not least, from the 2024 short-term incentive plan onwards, we will give a full retrospective disclosure of all targets and apply a 50% weighting for financial targets.
We will continue to monitor the need for further appropriate changes to our remuneration design and disclosures to ensure a high level of shareholder support. Before sharing you a few highlights regarding the implementation of the remuneration policy in 2023, I would like to ask your attention for some important activities of the Remuneration Committee during the year 2023. Firstly, as already announced in last year's remuneration report, the Remuneration Committee engaged Aon Radford as international compensation expert for a new market review of the compensation of the members of the Board of Directors, including the fees of the chair and the members of the committees. The resulting proposals have been included in the updated remuneration policy, which we will further explain under agenda item three.
The Remuneration Committee furthermore engaged Georgeson, an international strategic consultant, for the review of the 2022 and 2023 remuneration reports and the remuneration policy for the Board of Directors, respectively, to ensure continued alignment with market practice and applicable rules and regulations. Also, we consulted proxy advisors on the proposed changes, and their feedback has been considered. I already mentioned the resulting additional changes that were made to the 2023 remuneration report, and under agenda item three, I will, as said, explain to you the new remuneration policy for the Board of Directors. Looking at the implementation of the remuneration policy in 2023, the Remuneration Committee was pleased to note that Pharming had a positive year, with solid full year financial results, including significant growth in RUCONEST in the revenues, and of course, the launch of Joenja, leniolisib, for APDS in the U.S.
In April 2023, shortly after the FDA approval on March 24th, 2023. In doing so, Pharming continued to deliver on its strategic objectives that are aimed at serving the unserved rare disease patients and becoming the rare disease company of choice. Translating those results to the targets that had been set for the CEO for the year 2023, the Remuneration Committee calculated a total score of 130.5% on all financial and non-financial targets. A summary of the financial results in 2023 for the short-term incentive plan is now being projected on the screen. These results reflect the company's strong financial performance over 2023. I also invite you to read the detailed scorecard on all financial and non-financial targets, which can be found on pages 96 up to and including pages 99 of the annual report.
According to the remuneration policy, as adopted by our shareholders, an on-target performance by the CEO results in a payout in cash equal to 70% of his gross annual salary, with a maximum payout of 140%. So the Remuneration Committee multiplied the total of 130.5 score by the 70% on-target score, and this resulted in a gross cash payment to the CEO equal to 91.35% of the fixed annual salary for 2023. For the long-term incentive share plans, the first set of conditional shares awarded to the CEO for the performance year 2023... for the performance period 2021 until 2023, was scheduled to vest in the first quarter of this year.
The vesting percentage is based on the performance by the CEO against the long-term targets that were set at the start of this performance period, which were a combination of total shareholder return, which has a 40% weighting, and strategic corporate objectives, which have a 60% weighting. The Remuneration Committee concluded that the CEO had satisfied 99.5 out of the 100% of the corporate strategic objectives. Detailed scorecard, again, can be found on the pages 101 and 102 of the annual report. The score on the total shareholder return, compared to the AScX index and the Nasdaq Biotechnology Index, resulted in, unfortunately, a vesting percentage of 0% as a result of the share price performance.
Applying the weighting percentage of 60% to the score on the corporate strategic objectives, all of this results in a total vesting level of 59.7%, and therefore, a total number of 789,719 shares that vested for the CEO in the first quarter of 2024. The CEO is required to retain these shares for a total period of five years, as from the moment that these shares were granted in early 2021. More details on the CEO's total remuneration package for 2023 can be found on page 95 of the annual report. Finally, I would like to make a few comments regarding the salary of the CEO for 2024.
The board decided to increase the fixed salary of the CEO by 3% from EUR 624,000 in 2023 to EUR 642,720 for 2024. This salary increase takes into consideration the solid performance by the executive director in 2023, the strong performance delivered by the company over 2023 under the CEO's leadership, the 2023 pay ratio that stayed flat at 12 to 1 compared to 2022, and the benchmark data provided by Aon Radford. This increase is also equal to the average merit increase for pharma employees in Europe for 2023. We will now answer the questions that our shareholders may have on this section of the agenda. Richard, back to you.
Thank you, Steven. I would now like to invite our shareholders to ask their questions to Steven on this agenda item. Please go to one of the microphones and state your name, and, if applicable, the name of the shareholder you represent, before asking the first question. Please go ahead.
Yeah. My name is Keyner. I speak on behalf of VEB. Very clear presentation. 60% of the long-term bonus is determined by strategic objectives. Of course, strategy is very important, 40% by total shareholder return. Since there's no dividend, of course, it's the share price appreciation, which there hasn't been any. Because of this kind of policy, close to the maximum 60% of the long-term incentive is being paid out or is being granted. I must say, on behalf of shareholders, this hurts. This hurts because in the end, the share price development, including any kind of dividend, is in fact, the end result, which encompasses everything that you're trying to do.
It's operational excellence, it's defining a good strategy, implementing the strategy in a good way, having, in the meantime, results which are at least reasonable and a balance sheet which is not collapsing. So my point is, are you satisfied yourself, as the remuneration committee, as the non-executive board, are you satisfied yourself that in a period where the share price has been lacking, lagging the market, overall in a very, very strong way, and that you're granting any kind of bonus at all? And I understand this is the policy, and of course, it's up to you to say, "We respect the policy." But in the end, this hurts. And let me give you a kind of answer, which I would have hoped to come from your side.
In the end, it's up to you to convince the market that your strategy and the strategic objectives are wise, that they're helping the company and the shareholders in the long run. That if you're investing right now, and if the corporate strategic objectives are being defined and implemented in a correct way, this will definitely lead to very strong share price increase in the future, and maybe even some dividend. Obviously, the market sees it differently, and I was wondering how you see your own policy and see the result of this kind of policy in the past year.
Thank you. Thank you for the question. Stephen, do you want to answer the question regarding the remuneration committee and its comfort level with how people are being compensated and rewarded?
Yeah. Thank you, Richard. Thank you for the feedback. I think your question is as much feedback as it is a question, rightfully so. I would answer in the same line as what Richard said. We are building a rare disease company, and we're building that company for the long term. The plans are designed to do exactly that. So are we satisfied? There's parts where we are satisfied in terms of the continued growth of RUCONEST despite competition. The launch of Joenja in the United States, which is a significant milestone to get the product approved and commercially reimbursed. And so from that perspective, the CEO and the team definitely delivered and achieved their results.
The part where, as the board, we are also responsible, is to make sure that that ultimately results in shareholder return, as you put your money in the hands of the team to invest. With that part, we were obviously not satisfied, that 40% of the long-term incentive resulted in a zero payout, for the CEO and the team. We could have a discussion, whether that mix needs to shift, whether 40% is too little, too much. We tend to look at the markets. We tend to work with external companies that compare various biotech companies. And of course, we are in it for the long game.
But I take your feedback, and we will further discuss that as the remuneration committee sets the targets and the percentages for next year as we will approach the end of 2024.
Thank you. If I may react, Mr. Chairman.
Sure.
because this comes back to my very first question. So assuming that your strategy and your objectives are the right ones, the market is not consisting of only unreasonable people or stupid people. I, I, I can prove you that. There are lots and lots of companies who had very good strategic objectives, and the strategic objective didn't include making a profit or even being cash flow positive. But there was a clear path toward the future, addressing, describing the kind of market, how it would be developing, and the way how this company would capture a major part of this kind of market. So maybe something is wrong in the way you're communicating to the market, and that maybe more, you should be, put more effort or should become more effective in that. Maybe, maybe that is the key thing which is lacking.
If not, if not, why not wait until the results are there, that cash is coming out of your ears, that you can give a lot of dividend and so on? And then I can guarantee you, the share price will be very, very high, and also your bonus will come back to you. That's also long term. So my point is, we all agree that strategy, strategy is very important, and you should also measure the, the CEO based on strategic objectives. But the end result is always a share price appreciation. It has to be, and you have to explain to the market why this company is worth much more than what it is right now.
Thank you for that feedback again, and we, I think we heard you loudly. Thank you. Any other questions? All right, I'm gonna go now to online to see if there are any questions online. I'm being informed there are no questions online. We will now proceed with the voting on the remuneration report for the financial year 2023. 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'll explain in the next general, next year remuneration report, how the vote of the general meeting was considered.
As promised during my opening remarks, I will first explain the procedure for voting during today's meeting. Prior to this meeting, we received proxies and voting instructions from several shareholders on the designated voting items on the agenda. All shareholders that are following the webcast and would like to vote also had to issue a proxy prior to this meeting. All proxies have been processed and verified by our civil law notary. Shareholders who are with us in this meeting room and who have not yet issued a proxy will be able to cast their vote on the designated voting items during this meeting. These shareholders have received at the registration desk today their personal login credentials to log into this meeting to cast their votes. Please raise your hand if you have not received these login details or if you are encountering any technical problems.
Once I have opened the voting on any agenda item, you are invited to press 4 if you wish to vote in favor of the proposal, or to press against if you wish to vote against the proposal, or to press abstain if you wish not to vote. These votes will not be included when determining the voting results. You will be able to change your vote until the voting round has been closed by me. After each round of voting, the total number of votes cast and the final voting result will be shown on the screen. This will be done by adding up all votes already received by means of proxy and the votes cast during this meeting. The civil law notary will monitor this.
A total of 1,010 shareholders and 75,800,093,426 shares are represented today and are entitled to vote on all items on the agenda. We will now proceed with the voting on agenda 2B. Our shareholders are proposed to give a positive advice on the presented remuneration report for 2023. I have opened the voting. Please cast your votes now. I will now close the voting. The voting results will be shown on the screens in a few seconds. I'm pleased to confirm that the proposal is supported by an advisory vote by our shareholders with 95.62% majority. The next item on the agenda is item 2C on corporate governance.
Simon, could you please introduce this item and the subsequent agenda item 2D, for a summary of the dividend policy? We will address the questions of our shareholders on both sub-items after your introduction.
Thank you, Richard. Thanks. Agenda item 2C has been included to update our shareholders on material developments in the field of corporate governance. As you are aware, our American depository shares have been listed on the Nasdaq Stock Market in the U.S. since December 23, 2020. Our ordinary shares have continued to trade on Euronext Amsterdam. Pharming continues to take all steps required to ensure compliance with the applicable U.S. regulatory and requirements, inter alia, as announced on April 4, 2024. We filed that same day our annual report for 2023 on Form 20-F with the U.S. Securities and Exchange Commission. You can find the document on our website.
In addition, we have taken further significant steps in 2023 for implementing an enhanced internal control framework to ensure compliance by our company with the U.S. Sarbanes-Oxley Act. On page 66 of the annual report, you will find an outline of how Pharming has applied to Dutch Corporate Governance Code in 2023. The slide that is now shown on the screen provides a summary of the few remaining deviations that are deemed consistent with the size and activities of the company.
...Compared to 2022, we report one new deviation from the Dutch Corporate Governance Code. This new deviation results from the new provisions included in the updated Corporate Governance Code that entered into force on the first of January 2023. The new deviation refers to the new requirements that we should draw up a policy to facilitate a dialogue with the relevant stakeholders of the company on sustainability aspects of our long-term strategy. While the stakeholder analysis is already covered by our ESG program, the policy is being drafted within the framework of that program, building on our related pre-existing investor dialogue policy. We expect to publish the policy on our website this year.
To conclude, I'm pleased to inform you that the board has decided to establish an internal audit function, effective this year in 2024, in accordance with provisions 1.3-1.7 of the Dutch Corporate Governance Code. As for dividend policy, agenda item 2-D, Pharming continues to follow its existing policy to not pay dividends. The board of directors does not envisage the payment of dividends in the coming years. Payments of future dividends, if any, would be at the discretion of the board, considering numerous factors, including business prospects, cash requirements, financial performance, and product developments.
Thank you, Simon. We will now address the questions on corporate governance and our dividend policy. I'm now inviting our shareholders present today to ask their questions on corporate governance and dividend policy. Please go to one of the microphones in this room and mention your name again, and if applicable, the name of the shareholder that you represent, before asking the first question. I would like to ask Simon to answer these questions. Are there any questions? Yes.
Yeah, Keyner, VEB . Similar question that I asked maybe a couple of years ago. At this moment, there's one executive in the board, and the CFO, for instance, is not an executive. He's part of the management team. What makes you decide to continue this kind of setup? Because I can imagine that as Mr. Samuels looks very young and healthy, but at some point he will retire, or he will go to another company, and then suddenly you have to move even more quickly. Isn't it wise to have at least two executives in the board?
Yeah, Jabine, you're chair of our Nomination Committee. Do you want to address whether we want to have two executive directors instead of one?
What we do is, with these things, we take it very organized, if you like. So last year, when the question was raised, what do we do with our chair? We said, we're working on that, and that was progress. We now have, Richard Peters has joined us, and we're really looking at all the different elements in our portfolio that we think is relevant. And so we also, on a regular basis, look at things like that. For the time being, we're very happy with what we have, but we do ask questions like that on a regular basis to constantly test our strategy and the scenarios that we have available to us to assess what's best for us.
That's very good that you assess these kind of things.
Yeah.
My question is, why is the result of your assessment that one executive in your board is appropriate-
Well-
-instead of 2 or 3?
Well, I can tell you, as the Chairman of the Board, I think we have a highly functioning board-
Yeah
At the moment. And of course, the other thing, too, is that we do meet regularly, not only as a group, but also one-on-one with members of the executive committee. So they have direct access to each of us individually as well. So right now, we feel that we have a highly functioning, not only board, but also executive team. Over time, we constantly reassess these things, but at the moment, we don't think there is a need for adding an additional executive director.
Thank you.
Thank you. Are there any other questions? Okay, are there any questions online? I have been informed that there are no questions online. We will now proceed with the next agenda item, the financial statements of 2023, as included in the agenda item 2-E. The financial statements are included in the annual report. The financial statements were audited by our external auditor, Deloitte Accountants B.V. In accordance with the assignment given by your general meeting on May 17, 2023, Deloitte has issued an unqualified auditor's report for the financial statements 2023, that can be found on pages 180 and up to and including 186 of the annual report. I invite Ms. Louise Zwama, partner at Deloitte, to present the highlights and main findings that followed from the audit by Deloitte. Louise?
Thank you. Welcome. My name is Louise Zwama, and I'm an audit partner at Deloitte. I'm here today to represent Ingrid Buitendijk, who is the partner, the audit partner, that was responsible for signing the audit opinion to the financial statements 2023. She could not be here, so I'm replacing her because she's currently abroad and was unable to attend in person. I was not involved in the audit of 2023, but I will take over the engagement from Ingrid because she exceeded her five-year term. Where I say "we" in the short presentation that we have prepared, I mean the Deloitte audit team, because, as I said, I was not part of the audit 2023.
As mentioned by the chair of the supervisory board, we issued our independent auditor's report on April 3, 2024, both on the statutory financial statements that are filed with the AFM, as well as the annual report on Form 20-F filed at the SEC.
... In our audit report, we disclose that the management report, including remuneration report and other information, comply with the requirements of the Dutch Civil Code and the Dutch Standard on Auditing 720. We report one key audit matter in our report that is focused on the US revenue rebate accruals. This is reported as a key audit matter due to the use of significant assumptions and judgments in its calculation. I'll explain later what procedures we have done to address this matter. Other focus areas in the audit of 2023 included the launch of Joenja. Can you go to the next slide, please? Our materiality is determined based on revenue and slightly increased compared to prior year.
It was set at $2.6 million, and we have set our reporting threshold to management and the Audit Committee at $120,000 or lower, if we deemed it relevant for qualitative reasons. We set our component materiality at a lower level, not exceeding $1.5 million. Our scope covered the significant entities, and we realized the coverage of 99% of revenue and 98% of assets. For the non-significant entities, we performed analytical procedures. Can you please move to the next slide? Yeah. The US revenue rebate accruals, specifically aimed at the Medicaid rebate, was identified as a key audit matter due to complexity of the estimates, together with limited historical data available, judgments necessary to develop this estimate, and also the control deficiencies identified.
Auditing this estimate required both extensive audit effort and a high degree of auditor judgment when performing auditing procedures and evaluating the results of those procedures. We addressed this matter in the audit by performing a set of procedures. Among others, we evaluate the appropriateness of the consistency of the company's methods, data, and assumptions used to calculate the accrual. We tested the mathematical accuracy of the accrual. We tested significant assumptions and key inputs used to calculate the accrual. We evaluated the company's ability to estimate the accrual accurately by comparing actual claims received during the year to historical estimates, and through the use of data visualizations, we compared the U.S. revenue rebate accrual against historic data to evaluate the reasonableness of the estimate. We have no material findings to report.
With respect to communication with the board of directors and the audit committee, we met on several occasions during the year where we presented the audit plan, management letter, and our report to the board of directors about the results of the audit. We also held periodic update calls with the chair of the audit committee and management separately during the year. During the audit, we made use of specialists in the area of share-based compensation, valuation of the preference shares, and around fraud risks. None of these areas gave rise to a key audit matter, which we reported upon in our audit report. In terms of internal controls, we assess controls that are relevant to the audit. We reported our observations to management and the audit committee in the form of a management letter. The main observations are disclosed in the annual report by management on page 43.
Material weaknesses or significant deficiencies were identified over financial reporting across each of the components of the control framework and across the business and IT processes. Pharming is in the process of remediating those deficiencies to further development and of an implementation of formal policies, processes, internal controls, and documentation relating to financial reporting. Our approach with respect to evaluating the IT environment is that IT auditors are an integral part of the audit team. Testing is performed by the IT auditors to identify, analyze, and test relevant application and general computer controls, and cybersecurity is part of our risk assessment and IT audit. We paid specific attention to fraud risks in the audit.
We evaluate the design and implementation of relevant controls, including tone at the top, and paid specific attention to the following elements: how Pharming generates and processes journal entries, how management estimates are determined, the identification and accounting of significant transactions outside of the normal course of business. We held interviews regarding fraud with the CEO, CFO, and other senior finance personnel. We evaluated the disclosures regarding fraud risk assessments, management estimates and uncertainties, and we evaluated Pharming's fraud risk assessment, code of conduct, whistleblower policy, and incident registration. In terms of addressing risk of compliance with laws and regulations, we performed the following procedures. We obtained sufficient and appropriate evidence regarding compliance with laws and regulations that directly affect the financial statements. We were attentive to indications of suspected non-compliance with laws and regulations.
We again conducted interviews, among others, CEO, CFO, legal counsel, and senior finance personnel. And last but not least, we also read the minutes of the board of directors and the executive committee. We have no material findings to report on that aspect either. The financial statements have been prepared on a going concern basis. This has been disclosed in note 3 of the financial statements and note 26. And we performed, among others, the following procedures. We evaluate the reasonableness of the assumptions used by management. We also took into account all relevant information, which we were aware, we became aware during the audit, and if those were included in management's assessment.... And we also reviewed management's future outlook as part of procedures on the annual report.
Then for the audits of the financial statements 2024, we expect that our procedures will remain largely consistent with 2023. Well, this concludes our presentation, and we're happy to answer any questions that you might have.
Thank you for your explanation, Louise. Are there any shareholders in this room who would like to ask questions on the agenda item? Please go to one of the microphones. Simon, could you please address the questions on the financial statements? I would also like to invite Louise to answer questions on the Deloitte's audit report.
Yeah. My name is Keyner. I speak on behalf of VEB.
Right.
Actually, the first time that I see a partner of an accounting company presenting this without having been actively, personally involved in the numbers which we are discussing today. I put it more strongly, I'm happy that you're here, by the way, so covering for your colleague, but I was wondering, why didn't you invite-- why didn't you send somebody from the team itself? Since they are all very qualified, you don't need to be a partner to be able to say, to tell this story, I guess. Because I think at this moment, there are no major issues from a financial point of view, but if there would be, it would be more than wise that you were involved during the year as well. So that would be the first question.
Louise, do you want to answer the question?
Sure. Sure, yeah, we gave it careful consideration. We would be presenting here. I also brought someone from the audit team if we got detailed questions. That's my colleague would answer it. I'm not completely new to the Pharming audit. I was involved a couple of years ago as a director at that point in time, so I know the company very well, and that's also the reason why I returned to the engagement. I've been briefed very carefully by the audit partner and the engagement team on the procedures that we have performed and also the results of the audit.
Well, welcome back. Very clear answer. I'm happy with that. Now, the real question that I prepared for this session. I'm happy to see that Pharming, and this is very wise as well, seeing the maturity of the company at this point. I'm very happy that Pharming has decided to install an internal audit department. That is very important because you sometimes see that companies get into a big mess operationally because the internal controls are not solid enough, and they go far beyond the pure accounting stuff and all the admin processes. Those are very, very important. I know that you installed it formally, I think, in the beginning of this year, but I hope that already some people started last year.
I was wondering whether Deloitte has had any kind of contact so far with the internal audit department, and if these kind of discussions so far, that you've encountered something which was surprising or remarkable?
Louise, do you wish to answer?
Yes. Yeah, I personally also had interactions with the individuals in the audit, internal audit department. As I said, Pharming is in the process of remediating deficiencies, and is working very hard to get those remediated as soon as possible. And as such, we have, I think, even weekly contact with the internal audit department, making sure that the right steps are taken and that our testing goes along with the yeah, the progress that the company is making. So far, no surprises, at least not to me. It is a very normal process the company is following, as I see at similar companies going through this process of remediating deficiencies.
Again, I applaud internal audit department. Thank you.
Thank you very much. Are there any other questions in the room? Great. I've also been informed there are no questions online. We will now proceed with the voting on the financial statements. Our shareholders are proposed to adopt the financial statements for the financial year 2023. Once I have opened the voting on this agenda item, the shareholders in this meeting room are invited to press four if you wish to vote in favor of the proposal, or to press against if you would wish to vote against the proposal, or to press abstain if you would wish to not vote. These votes will not be included when determining the voting result. I will now open the vote, the voting. Please cast your votes. I will now close the voting.
The voting result, including the votes received by means of proxy, will be shown on the screen in a few seconds. I'm pleased to confirm that the proposal has been adopted by our shareholders with a 99.31% majority. The financial statements for the financial year 2023 have been adopted. On behalf of the entire board of directors, I would like to thank our management and all employees of Pharming for their dedication, and congratulate them on the results achieved over the year 2023. 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 the duties during the financial year 2023.
As far as this is reflected in the annual report, in the financial statements, in other public disclosures, or in statements made during this general meeting. I would like to invite our shareholders to ask their questions on this agenda item. Please again, go to one of the microphones if you have any questions. I note there are no questions in the room, and I also note there are no questions online. We will now then proceed with the voting on this agenda item. Our shareholders are proposed to discharge the members of the board of directors, and therefore, to release them from liability for the exercise of their duties throughout the financial year of 2023. I will now open the voting and invite our shareholders in this meeting room to cast their votes.... I will now close the voting.
The voting result, including the votes received by means of proxy, will be shown on the screen in a few seconds. I'm pleased to confirm that the proposal to discharge the members of the board of directors has been adopted by our shareholders with a 98.07% majority. We will now proceed to agenda item number 3, adoption of the updated remuneration policy for the board of directors. I would like to ask Steven Baert, the Chair of the Remuneration Committee, to present to you the updated remuneration policy for the board of directors. Steven?
Thank you, Richard. I'm back. I'm pleased to present to you the updated remuneration policy for the board of directors. In accordance with Dutch statutory provisions, the remuneration policy for the board of directors should be submitted for adoption by the annual general meeting at least every four years. Since the remuneration policy for the board of directors was last adopted by our shareholders on December eleventh of 2020, we have submitted the updated remuneration policy for adoption by our shareholders during today's meeting. The proposed policy has been updated to ensure continued alignment with market practice, applicable rules and regulations, and expectations from shareholders.
As already explained, under agenda item two, we engaged Georgeson as the international strategic consultant for the review of the current remuneration policy, and we engaged with proxy advisors to obtain their feedback on the new draft remuneration policy. As part of the meeting documents for today's meeting, you have received a presentation with the summary of the main proposed amendments, including the rationale for the change, and we have also published the full text of the updated remuneration policy, clearly reflecting all changes compared to the current policy. As you will have seen, it is proposed to add the following provisions for the remuneration of our CEO. Derogations of the policy shall, going forward, only be permitted in case of exceptional circumstances, if necessary, to serve the long-term prospects and sustainability of the company. Deviations are also not...
shall also need to be aligned with the main objectives of the remuneration policy to ensure a consistent approach. We've added a peer group guiding principle, which provides that Pharming shall align itself with European best practices in the field of remuneration, while remaining competitive in the United States labor market to support the successful execution of its strategy. The latter is important, as in 2023, U.S. market accounted for more than 97% of sales generated by Pharming. The policy provides that remuneration of the executive directors is reviewed according to the benchmark of the region, whether that's the E.U. or the U.S., in which they reside.
In relation to an increase of the base salary of the executive director, the policies proposed provide that any increase is required to be substantiated by the outcome of the director's annual performance review, the company's performance, changes in roles and responsibilities, changes in pay and conditions across Pharming, and two yearly market benchmarks. The policy provides that salary levels are each time determined based on the country of residence of the executive director. In relation to the short-term and long-term incentive plans, we've included an extended outline governance process for target setting, including a link of all targets to strategy and measuring. For the short-term incentive plan, we also added a confirmation of retrospective disclosure of all targets and a weighting of financial targets of at least 50%.
For all incentives plans, a detailed vesting schedule for all quantifiable targets has been added, including a threshold and a maximum vesting percentage for each target. The board of directors will also undertake to ensure that dilution limits, due to the equity plans for staff and the executive director, are prudently applied. The related grants will not result in exceeding 10% of all issued and outstanding shares of Pharming on a diluted basis. And last but not least, we propose to extend the clawback provisions in the incentive plan in line with the SEC requirements, Dutch law, and Dutch corporate governance code.
For the non-executive directors, the proposed changes can be summarized as follows: As I explained under agenda item 2 B on the remuneration report for the year 2023, we engaged Aon Radford, an international compensation expert, for a new market review of the compensation of the members of the board of directors, including the fees of the chairs and the members of the committee. Taking the advice from Aon Radford into account, we will not propose any changes to the base fee and equity of the non-executive directors for their memberships of the board of directors, as these fees were found to be in line with the European and the US 50th percentile market benchmarks. We did, however, notice that the committee fees have not changed since tw...
2020, and that the frequency of committee meetings and the workload in these meetings has increased significantly as a result of Pharming's growth, its significant presence in the U.S. market, and the company's long-term strategy and ambitions. In view thereof, we propose to increase the fees paid to the chairs and members of the respective board committees, as summarized on the screen. The proposed increase will ensure that the fees will be aligned with the European market benchmark for the fees of committee members.
... The non-executive directors have received shares as part of their fixed annual remuneration since 2020, consistent with U.S. market practice and in accordance with the remuneration policy for the board of directors, as adopted by our shareholders on December 11, 2020. To safeguard the independence of the non-executive directors, the number of shares awarded has been fixed, and the grant has not been linked to the performance of Pharming. To avoid that impression, we propose to delete the current condition that all shares held by non-executive directors will be a long-term investment only. We are aware that this will constitute a deviation from the corporate governance code that we will report in the annual report of the year 2024.
Last but not least, I would like to mention that the updated remuneration policy, and therefore all changes, are proposed to become effective with retrospective effect from the first of January 2024. The shareholders, the Dutch Works Council, submitted a positive advice regarding the proposed updated remuneration policy. The Works Council's advice was also part of the meeting documents for the AGM. I have the pleasure to give the floor now to the chair of the Works Council, Mrs. Xian Liu, for an explanation of the advice.
Good afternoon. Good morning. Dear Chair, Board of Directors, dear shareholders, and guests, my name is Xian Liu. I'm the chair of Pharming's Dutch Works Council. I would like to thank you to begin with, the invite me to this annual meeting. Then indeed, in March, the Dutch Works Council received a request of advice from CEO Sijmen de Vries about the intended decision of submitting a new remuneration policy. The existing remuneration policy was adopted by the shareholder in 2020, which is four years ago. To meet the requirement of a Dutch civil code, which is list the company to submit their remuneration policy at least once in every four years. Hence, we fully understand the necessity of submitting a new remuneration policy.
We also appreciate that the board of directors engage leading consultants and aligned with the proxy advisors to ensure the continued alignment with best practice for the new policy. Some effort has been invested in ensuring the quality and the compliance of the new remuneration policy, particularly in line with SEC requirements, Dutch law, and Dutch Corporate Governance Code. The clawback provision for year incentive plan was included in the new remuneration policy. With that, on behalf of all members of Works Council, I'm happy to share that the Works Council advice, based on the Works Council Act, the Works Council has no objection to the intended decision of adopting the new policy. Thank you.
Thank you, Xian, and thank you, Steven. I propose that we will now answer the questions that our shareholders may have. I would like to invite our shareholders to ask their questions to Stephen on this agenda item. Please go to one of the microphones here in the room and state your name, and, if applicable, the name of the shareholder you represent before asking the first question. Are there any questions here in the room? I note that there are no questions in the room, and I've just been informed there are no questions online. We therefore now proceed with the voting on this agenda item. Our shareholders are proposed to adopt the updated remuneration policy for the board of directors with retrospective effect from the first of January, 2024.
This resolution includes the approval of the long-term incentive plan for the executive director, in accordance with the parameters and other conditions as set out in the updated remuneration policy, within the meaning of the Dutch civil code. I kindly remind you that in accordance with the Dutch law, the adoption of the proposed remuneration policy requires a 75% majority of the votes cast. I will now open the voting and invite our shareholders in this meeting room to cast their votes. I will now close the voting. The voting result, including the votes received by means of proxy, will be shown on the screen in a few seconds. I'm pleased to confirm that the proposal to approve the updated remuneration policy for the board of directors has been adopted by our shareholders with a ninety-four point one seventeen... Sorry, 94.17% majority.
Under the general, the next agenda item four, we present the proposals to our shareholders to reappoint Ms. Barbara Yanni and Mr. Mark Pykett. I'm now handing over to Jabine van der Meijs, our Chair of the Corporate Governance Committee, to introduce this agenda item. Jabine?
Thank you, Richard, and good afternoon to our shareholders. As explained in the explanatory notes, the terms of our non-executive directors, Barbara Yanni and Mark Pykett, are scheduled to expire at the closing of today's general meeting. Both were first appointed to the board of directors on the eleventh of December, 2020. The members of the board of directors were appointed in different years, and this implies that all mandates are also scheduled to expire at different moments in time, which is helpful to preserve continuity.... In this context, it is worth mentioning that the mandates of a few members are scheduled to expire during the AGM scheduled next year, so in 2025. This applies to the mandate of Simon de Vries as Executive Director/CEO, but also to the mandate of Deborah Jorn, Léon Kruimer, Steven Baert, and me, as non-executive directors.
The board is, of course, well aware of this, and the potential scenarios are under review by us. As soon as we have more information on the reappointment or succession of each director, we will disclose that. As said, the mandate of Barbara Yanni and Mark Pykett are scheduled to expire at today's general meeting. The agenda includes proposals for the reappointment of Barbara Yanni and Mark Pykett as non-executive directors, each time by way of binding nominations. We are pleased that both Barbara Yanni and Mark Pykett have indicated to be available for reappointment. I will briefly summarize the highlights of the proposals on the agenda in accordance with the outline in the explanatory notes. The board of directors have assessed the performance of Barbara and Mark over the past four years and reached a positive conclusion.
The board also assessed that Barbara Yanni and Mark Pykett continue to be independent under the Dutch Corporate Governance Code and comply with the maximum number of other outside positions as set by the Dutch Civil Code. An up-to-date overview of their other positions can be found on our website. Therefore, we propose to our shareholders today, by way of binding nomination, to reappoint Barbara Yanni and Mark Pykett as non-executive director for a period of four years, expiring at the closing of the annual general meeting to be held in 2028, to enable our company to continue to benefit from their knowledge and experience in the coming years. The Works Council submitted a positive point of view regarding the proposed reappointment of Barbara Yanni and Mark Pykett. The documents summarizing the Works Council point of view are part of the meeting documents for today's meeting.
I would like to again invite the Chair of the Works Council, Ms. Xian Liu, for an explanation of the opinion of the Works Council.
Dear Board of Directors and dear shareholder guests, my name is Xian Liu, I'm Chair of Pharming's Works Council. I'm happy to be here again to share the opinion of Works Council for this reappointment of non-executive directors. In March, the Dutch Works Council received a request for opinion from CEO, Simon de Vries, about the intended decision of reappointments Ms. Yanni and Mr. Pykett as non-executive director following the current term. We appreciate that Ms. Yanni and Mr. Pykett was willingness to carry on their significant contribution to the Pharming's board of director, and their appointment will surely benefit the continuity of ongoing activities. We also appreciate that the Corporate Governance Committee has evaluated and confirmed that the reappointment comply with the Dutch Corporate Governance Code and the Dutch Civil Code.
With that, on behalf of the Works Council members, I'm happy to share the Works Council opinion. Based on the Works Council Act, that order on nominations, we endorse the intended decision of reappointing Ms. Yanni and Mr. Pykett as non-executive director for the period of four years. Congratulations.
Thank you, Zhen, and thank you, Jabine. I propose that we will now answer the questions that our shareholders may have, and we'd like to invite our shareholders to ask their questions directly to Jabine on this agenda. I note that there are no questions here in the room, and I've also been informed that there are no questions online. We will now move on to the voting of the proposals presented under this agenda item, each time by binding nomination, as explained in the explanatory notes to the agenda for today's meeting. In accordance with Pharming's articles of association, the binding nominations may each be rejected with a simple majority of the votes cast, if these votes represent at least one-third of the issued capital.
If any nomination is rejected by a simple majority of the votes cast, but such majority does not represent at least one-third of the issued capital, a new meeting could be convened. During that new meeting, the nomination may be rejected with a simple majority of the votes cast. In that event, the board will draw up a new nomination. I'm now opening the voting on the proposal to reappoint Barbara Yanni by way of binding nomination for a period of four years. I will now close the voting. The voting result, including the votes received by means of proxy, will be shown on the screen in a few seconds. I'm pleased to confirm that the proposal has been adopted by our shareholders with a 90.23% majority. Congratulations, Barbara.
Thank you.
I'm now opening the voting on the proposal to reappoint Mark Pykett by way of binding nomination for a period of 4 years. So please go ahead and vote for Mark Pykett, or against, or abstain... I will now close the voting. The voting result, including the votes received by the means of proxy, will be shown on the screen in a few seconds. And I am pleased to confirm that the proposal has been adopted by our shareholders with a 98.88% majority. Congratulations, Mark. The next item on the agenda is item 5, the proposed authorization of the board of directors to issue new shares or rights to acquire shares. This proposal covers the designation of the board of directors for a period of 18 months, starting today, as the body authorized to issue new shares or the rights to acquire shares.
The authorization is limited to 10% of the issued share capital, and is intended for general corporate purposes. This authorization may be used, for example, for Pharming's general financing purposes. This includes up to 3% of the issued capital, share insurances under the remuneration policy for the, our board members, and the incentive arrangements in place for the CEO. The issuance of stock options or restricted shares under the equity incentive plans for our staff are also covered by this authorization. The board will also be authorized to limit or exclude the preemptive rights of existing shareholders when issuing shares or rights to acquire shares. Once approved by our shareholders, the authorization will replace the existing authorization for general purposes that was granted on May 17, 2023. I'm now inviting our shareholders in this room to go to one of the microphones to ask their questions.
I note that there are no questions in the room, and I'm noting also there are no questions online. We will now move on to the voting on the proposal presented under agenda item 5. This proposal entails, entails the authorization of the board of directors to issue shares up to 10% of the issued capital for general purposes, such as financing. I'm now opening the voting and invite our shareholders in this meeting room to cast their votes on this proposal, which is described in more detail in the explanatory notes to the agenda. The polls are open. I will now close the voting.
The voting result, including the votes received by the means of proxy, will be shown on the screen in a few seconds, and I am pleased to confirm that the proposal has been adopted by our shareholders with a 93.49% majority. The next item on the agenda is agenda item 6. This item relates to the proposed designation of the board of directors for a period of 18 months, starting as of today, as the corporate body authorized to repurchase fully paid up shares in Pharming's own capital up to 10% of the issued capital. I kindly refer you to the details in the explanatory notes to the agenda for today's meeting. The proposed designation will replace the current authorization as granted by the general meeting on May 17, 2023, and I would like to invite our shareholders to ask their questions.
Are there any questions on this agenda item here in the room? I note that there are no questions, and I'm also being informed that there are no questions online. So we will move on to the final voting round for today's general meeting. I'm opening the voting and invite our shareholders in this meeting room to cast their votes on the proposed authorization of the board of directors to repurchase not more than 10% of the issued capital. This proposal is described in more detail in the explanatory notes to the agenda for today's meeting. The polls are open. I am now closing the voting. The voting result, including the votes received by the means of proxy, will be shown on the screen in a few seconds.
I'm pleased to inform that the proposal has been adopted by our shareholders with a 96.33% majority. The final agenda, item seven, any other business? Under this agenda item, we will address the questions that are of a more generic nature, obviously, to the extent the topics are in scope for this meeting. Please go to one of the microphones if you have any questions.
Yeah. My name is Keenan. I speak on behalf of VEB. I was wondering whether you... At the beginning of this year, you had the first press release about the results. Revenues were much better than the market expected. A month later, the final numbers came out. Costs were even much higher than the market was fearing, so profits were down. Actually, it was a loss-making period. Now, the market was obviously very disappointed and surprised. I was wondering, were any of the non-executive directors surprised?
No. You cannot grow a company without investing, and especially when you're launching a new drug. The worst thing that we can do is waste time by being penny-wise, pound-foolish, or something like that they say in English, right?
I-
We have to invest.
I agree fully.
Yeah.
Now, the point I'm trying to make is something very different. The fact that none of the non-executives were surprised about that there was a loss-making year, that the costs were much higher even than people would assume, based on the very high revenue. The fact that the market was disappointing, disappointed, by definition, it means that expectations were not set correctly in the market. Again, this reconfirms my earlier point, that the way you're communicating and setting expectations in the market needs to improve.
We appreciate that, and we've heard you loudly a few times today. So thank you very much for emphasizing that. Are there any other questions in the room? I also note there are no questions online, and therefore, I'm now closing this meeting, and thank you all for your attendance today. We look forward to meeting all of you again soon during one of our webinars or one of our many planned corporate events. And I also would like now to invite our shareholders present in the room here in this meeting today, to join us in the foyer for drinks and some additional conversation. Thank you so much.