Ladies and gentlemen, I would like to welcome you to this annual general meeting of the shareholders of Pharming Group N.V. I also would like to welcome our shareholders who are following this meeting through the live webcast. By my side, you will see that I have my fellow non-executive directors, Jabine van der Meijs, Barbara Yanni, Steven Barr, Leon Kramer, and our CEO and executive director, Fabrice Chouraqui. Deborah Yorn, our vice chair, and our fellow non-executive director, Mark Pickett, are attending this meeting online. I would like to welcome in particular Dr. Elaine Sullivan, who will be proposed today as a new non-executive director. All members of our executive committee are present, either in this room or online. I'm also pleased to welcome the chair of our Dutch Works Council, Ms. Zhen Liu, and the other representatives of the Dutch Works Council.
Also with us today is Mr. Jules van der Winkel, civil law notary and partner at NautaDutilh. As we are a global company, this meeting will be held in English, and headphones are available for you to listen to the live translation. Please note that the use of mobile phones and recording devices is prohibited. I kindly ask you to switch off your devices now if you have not done so already. This meeting was convened in accordance with the applicable statutory requirements. The notice to convene was published on April 30, 2025, by way of an announcement on Pharming's website and a press release. The agenda and all meeting documents were published at that same moment. As a result, valid and binding resolutions can be adopted today on the 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 of NautaDutilh. The shareholders who are present in this room and who have not issued a proxy earlier will have the opportunity 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 shares that are represented during this meeting. These numbers are being verified at this very moment. You were all invited in a notice to convene to send us your questions on the various agenda items by email. We have not received any questions via email.
In addition, the shareholders who are following this meeting online were invited to indicate also by email if they would like to ask their questions online. We have not received any requests from shareholders to be able to ask questions online. All shareholders who are attending this meeting in person today will, of course, be able to ask questions today on the respective items on the agenda. I will invite these shareholders to go to one of the microphones in the room here when we arrive at the questions and answer part for the respective 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. Please do not ask more than three questions at a time to enable other shareholders to ask their questions.
If that is more convenient for you, please feel free to ask your questions during the Q&A sessions today in Dutch, and we will translate this for you into English when necessary. A full audio recording will be made of this meeting to facilitate the drafting of the minutes. 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 December 11, 2025 at the latest. Ladies and gentlemen, I would like to move on to the second agenda item, the annual report for the financial year 2024. This agenda item includes several sub-items. I would like now to invite our CEO, Fabrice Chouraqui, to elaborate on the business, the operations, and the results for the financial year 2024.
Thereafter, our Chief Medical Officer, Anurag Relan, will share with you details regarding KL1333, the lead product of our new subsidiary, Abliva. Fabrice?
Thank you very much, Richard, and good afternoon, everyone. It's been three months since the last general assembly, and I must say I'm very excited to have joined Pharming. Week after week, I've been witnessing the passion of all Pharming employees to serve rare disease patients. Their commitment is really palpable throughout the company, whether you are in the production facilities, at the headquarters in Leiden, in Warren, New Jersey, or if you are with the field teams. I'm also truly impressed with the development of the company over the past decade and its significant growth prospects. RUCONEST has become one of the cornerstone treatments for on-demand HA. Joenja is a transformative treatment for APDS patients and already on the market in the US and in the UK. The recent completion of the acquisition of Abliva is another stepping stone in the development of the company.
We are now clearly on our way to realize our vision for Pharming, which is to make the company a leading global rare disease company with a diverse portfolio and presence in large markets that leverages a proven and efficient clinical development, supply chain, and commercial infrastructure. Our results in 2024 are a good illustration of the solid foundation that we have built to realize this vision. Full year 2024 revenues increased by 21% to $297 million, with operating profit and positive operating cash flow in the last two quarters of 2024. We are investing in our pipeline with the objective to generate $2 billion potential assets. The potential new indication for PIDs with immune dysregulation, including genetic PIDs and CVID, are an opportunity to significantly expand Joenja's addressable patient population beyond APDS. KL1333 in mitochondrial diseases is another potential transformative asset for patients with a billion-dollar revenue potential.
We have a number of tangible value creation catalysts in the near term, which I will discuss in greater detail. In 2024, RUCONEST grew 11% to $252 million, driven by a continued increase of new patient enrollment up 24% year-on-year and the sustained expansion of our prescriber base up 11%. This continued growth is a testimony of RUCONEST's unique profile and value proposition for HA patients in the on-demand segment. As many of you know, HA is caused by the deficiency or the dysfunction of the C1 esterase protein, a protease inhibitor involved in the regulation of inflammation and immune function. This mechanism of action explains the unique efficacy profile of RUCONEST regardless of the type of HA.
Data shows that with RUCONEST, 97% of attacks are addressed in a single dose, and 93% of patients achieved a sustained response for at least three days, which is well beyond what is often possible with other treatments. As you see in these pictures, severe HA attacks are highly debilitating when they occur on external tissues, and they can even be life-threatening when they occur in internal organs. This is why the rapid onset of action and the fast onset of relief of RUCONEST give moderate and severe patients the reliability they need to better control their lives. It explains why RUCONEST has a unique value proposition for this subcategory of patients that is driving its continued growth after 10 years on the market. Moving to Joenja. In 2024, Joenja revenues increased by 147% to $45 million.
At the end of March 2025, we had 106 patients on paid therapy in the US and an additional 187 patients on access programs and clinical studies globally. As you will see in a few minutes, the drug is still in its early stage of its life cycle, with many well-defined growth acceleration opportunities in the near term. In Joenja, we have the only product indicated to treat APDS. APDS is a primary immune deficiency, which is caused by a gene defect. The consequence is the immune system doesn't develop properly, which often leads to severe clinical manifestations and early mortality. You should know that about 25% of APDS patients unfortunately die before the age of 30. This slide is a great illustration of the transformative impact Joenja can have on patients. In this case, a 24-year-old male that we followed for over six years.
On the left-hand side of that slide, you can clearly see the severity of the symptom that this patient endured. After starting Joenja, our patient was able to stop infusions of immunoglobulin, had no hospitalizations, his blood platelets increased, and critically, the organ damage in this instance, the lungs, has not worsened. The clinical impact of Joenja means that this young man has been able to walk and drive without difficulty, graduate university, and has now secured a full-time job. Results like this truly explain the significant potential of Joenja. In my opinion, Joenja is a good example of an asset with a clear stream of growth catalyst in the near and long term. In the US, after an initial bolus of patients at launch, we are working to identify and enroll new adult APDS patients.
As you heard during our first quarter earning call, our efforts are paying off with an acceleration of the number of new patients on the drug. In addition to the continued penetration in the adult APDS market, Joenja has three significant growth catalysts in the short term. First, the reclassification of patients with a variant of uncertain significance, VUS. These are patients who initially had a non-conclusive genetic test, and because of data, which will soon be published, a portion of these patients will now be formally diagnosed as APDS patients and will be eligible to Joenja. The second growth lever is the label expansion to the pediatric population. The pediatric trial is completed, and we expect the expansion of Joenja's label in the first half of next year.
We have already identified about 65 pediatric APDS patients in the U.S., and 18 are already treated with Joenja through a free access program. The third growth catalyst is the launch of Joenja in a selective number of key markets outside the U.S., which has effectively started in April with the UK All these opportunities will drive an acceleration of the number of patients on Joenja, not only in the near term, but also in the long term, and it will fuel its growth. Now, when we think about the long term, there are also two other significant growth opportunities that have the potential to make Joenja the first billion-dollar drug for Pharming.
These are the two new indications that target patients with similar clinical and biological features to APDS, but with a much larger prevalence, which means that the targeted population will increase very significantly and reach more than 30 times what the APDS target population is currently. We already had a positive experience in a handful of these patients who have been treated with Joenja as part of our compassionate use program. We have two phase two trials ongoing to demonstrate the value of Joenja in these two potential new indications. As you can see, we are only at the early stages of the life cycle of Joenja, and there are many opportunities to unlock in both the short term and the long term.
You are familiar with our pipeline, and you see that this year, there is a third molecule in our portfolio, KL1333, for primary mitochondrial diseases, which we acquired from Abliva. To tell you more about this new drug in its final stage of clinical development, I'm pleased to welcome to the stage Anurag Relan, our Chief Medical Officer.
Thank you, Fabrice. We are indeed very excited about this new program that we've acquired through Abliva on KL1333 for primary mitochondrial disease. Primary mitochondrial disease is a disease that you can think of as these powerhouses of the cell. These are patients whose mitochondria do not function properly, and because the mitochondria do not function properly, these patients lack energy. You can think of this analogous to a situation where a car does not have enough gas and therefore cannot function properly and cannot move properly in the absence of that gasoline. These patients, because they don't have this energy produced by the mitochondria, they lack the type they have symptoms such as fatigue and muscle weakness.
KL1333 targets the underlying problem that these patients have that allows them to produce ATP, and it specifically normalizes this ratio of these chemicals called NAD+ and NADH, thereby improving the mitochondrial function. We have data now, both in vitro data as well as animal data, and lastly, including some patient data showing that KL1333 can be beneficial for this mitochondrial function. There are already a large number of these patients with primary mitochondrial disease diagnosed and potentially addressed by KL1333. We anticipate that there are actually more than 30,000 such patients in Europe as well as in the US. There is a registrational study underway in which patients are going to receive KL1333 or placebo, and I'll talk to you a little bit about that in a moment. This study is using endpoints that will enable potential enrollment and registration of the study.
We have a positive interim analysis conducted already, and I'll talk to you a little bit about that in a moment. We recently resumed the enrollment in the second wave of the study that would put us on track to be able to have readout for the study in 2027 with a potential approval by the end of 2028. This is a quote from a patient with primary mitochondrial disease, and I think it's something that really exemplifies what drives us to find help for these patients. You can read this and see the degree of fatigue that these patients experience is not trivial. This is fatigue that they experience on an ongoing basis and that they have their entire lives.
With the program that we have, we have a pivotal study underway, and there's a couple of features that I'm going to talk to you about in this study. The first is that there was what's called wave one, where 40 patients were enrolled. These patients were enrolled to receive KL1333 or placebo, and they received that for six months, and there was an interim analysis done at 24 weeks. This study is what's called a blinded study, so the patients nor their doctors know what they receive, but what we did was what's called an interim analysis. After six months of treatment, there was a statistician that took a look to see how the patients were doing on either group. What we found was that the patients who were receiving KL1333 were doing better than the patients who received placebo.
By doing that analysis, we say that the study passed what's called futility, and it demonstrated that if we increase the size now to 180 patients, that by the end of the study, we would be able to have statistical significance if we're able to maintain the degree of differences and characteristics that we saw at the interim analysis. Also important in this analysis from wave one patients was what's called the review by the Data Safety Monitoring Committee, and they specifically saw that the safety and tolerability were acceptable, that they required no changes to the study design, and then again, that by increasing the total number of patients to 180, we would have the adequate what's called power to be able to detect a difference between the active group KL1333 and placebo.
We have now restarted the study, so in the last couple of months, we've restarted the study with the goal again to achieve 180 patients for a total of 48 weeks. We have the wave one sites, so sites that were already open in the first part of the study. They are enrolling patients, and we're actually opening a large number of additional sites to be able to accelerate the completion of the study. This will enable us to be able to have readout for the study by 2027. With that, I'm going to turn it back over to Fabrice to walk us through some financials.
Thank you very much, Anurag. Before we conclude this business update, let me give you an overview of our financial results for 2024. As I mentioned, the total company revenues were up 21%, driven by the robust growth of both RUCONEST and Joenja. OpEx increased by 10% during the year, but operating loss narrowed from $16.2 million in 2023 to $8.6 million in 2024. The company delivered an operating profit and positive operating cash flow in the last two quarters of 2024. Our cash position reduced, mainly driven by the refinancing of our convertible bond for a lower amount than the previous bond, $100 million compared to $125 million before. We have announced our 2025 financial guidance in March when we disclosed our full year 2024 results.
We raised our revenue guidance in May on the back of the strong first quarter results and the outlook for the remainder of the year. You can see the updated guidance on the slide, which implies a growth between 9% and 14% this year. We also reiterated our expectation that available cash and future cash flows are expected to cover all current pipeline investment that we spoke to you about today. As you can see, we are building a solid platform for sustainable growth with a series of clear catalysts in the short and near term. Given our significant growth outlook, I believe that our ability to be disciplined financially will be as important as generating top-line growth to unlock significant value creation in the near and long term.
As a first step, I've announced a cut of G&A expenses by 15% or $10 million on an annual basis to optimize capital allocation to grow our business. Today, more than ever, our goal is to develop a leading rare disease company, and I'm personally, together with all the executive committee of Pharming, grateful for your support as shareholders. Thank you.
Thank you, Fabrice and Anurag. I would like now to open the session to our shareholders to ask questions regarding this agenda item. Please go to one of the microphones for that. Please state your name and, if applicable, the name of the shareholder that you represent before asking your first question. Also, we ask you to not ask more than three questions at a time so that you can offer other shareholders to ask their questions as well. Are there any questions?
Yeah. Good afternoon. My name is Keenan. I speak on behalf of VB. Congratulations for very nice results and also very nice prospects for the future with your investments. May I start with a totally different? I've got two major topics. The second topic, I'll come in the second round, if you agree, Mr. Chairman, that has to do with the internal control mechanisms, a totally different topic. For now, I would like to focus more on the business side of, and I would like to start with one small question. Very often, I've been following biotech companies for a couple of decades already, and very often I get very positive, hilarious, you're great, the billions of dollars are going around every time.
At the same time, we have to wonder, how is it possible that Pharming was able to buy this potential, high potential, billion dollar or more future medicine, KL1333? How is it possible that you were able to buy it? Were we the only ones who saw the potential of that? Is the rest of the market not interested in a medicine, in a kind of compound that would be able to address a market like that? How is that possible? What have the others not been seeing, what you were seeing, or were we just lucky? That would be my first question. Second question, that's more strategic, I think. If you look at where your revenue is coming from, where our revenue is coming from, if you look at RUCONEST, it's 98% from the U.S., Joenja is 90%.
Then, from a pure financial perspective, I was wondering, is it worthwhile addressing also the needs beyond the U.S.? I understand the patients, and you would like to make sure that the people who are severely ill, that they can have some kind of medication, I understand that, but purely from a financial perspective, is it profitable to also focus your management attention, going through regulatory processes, the whole sales administration, the distribution channels, and so on, to address 2% or 10% of the revenue? Would it be more worthwhile to just focus on the U.S.? That's the first part of the question. The second part would be, very often, the pricing in the U.S. is much more attractive than, for instance, in Europe. You also heard what Donald Trump has been saying.
Many things that he's saying are absolutely rubbish or very, very negative, but it doesn't mean that everything he's saying is rubbish. One thing that he's been saying recently is the U.S. deserves to have a kind of most favored nation clause pricing. Why should U.S. patients, U.S. customers pay a premium price, very often three or four times as much as a patient in the Netherlands or in Australia? I was wondering, is there any kind of risk for Pharming that there will be some kind of pressure on the pricing in the U.S. versus the rest of the world? Those are the two key things as far as the focus on your geography is concerned. Why not focus fully on the U.S. and let the rest of the world be as it is?
First of all, thank you for seeing you again. It's great to see you and attending the meeting, and thank you for your questions. Why don't we take the Abliva one? I'll take a crack and then I'll pass it to Fabrice. Look, the Abliva opportunity was not an accident. We've been really focused on business development before with Simon de Vries, who was our CEO and the team, and of course with Fabrice. We've been in the game for a while. I think at the last shareholder meeting, we were asked a question as, are there opportunities that you say no to? We say no to many. When we saw this one, we did a very strong, quick due diligence. We also were able to make an offer, all cash offer, which differentiates from a lot of other players.
In a combination of being in the game and being aware of what's going on in the marketplace, being nimble, we are a small company, we can move fast, and opening basically the cash book made it that we were the successful party. I do not think it is an accident. I think it is because we have been at this for a while and we know we are in the game, we see an opportunity and we act on it. Fabrice, do you want to add anything?
I think you've said it. Abliva is a Swedish company which didn't have a very high profile in the market. I believe that if it had been based in Boston, had a different set of shareholders, things would have been probably different. That's how it works. The asset is of very high quality. I heard about actually the plan from Richard as we were talking about me coming actually to the company, and I felt actually this was a very attractive opportunity.
Thank you.
I mean, that's the thing. We were in the process of securing Simon's replacement. The last thing you want to do is do a deal like this and say, "Here, this is your baby now." We wanted to make sure that he was actually fully on board and he was.
Great. Thanks.
We can take also the other questions around, is it worthwhile to run the business, expand the business beyond the US? You want to take that?
Absolutely. As you have said, a lot of things are happening in the U.S. Right now, the vast majority of our sales are coming from the U.S. The first part of your question is, if I understood correctly, should we solely focus on the U.S.? Why actually take our eyes off the ball for 2%- 3% of our revenues? Actually, if we want to balance our risk as the company is growing, we may think about expanding geographically. To do so, we need to do it in a financially responsible way and have the right catalyst. I do not think that in the past we had the right catalyst, but with Joenja, we have a drug which has the potential to become a success in a number of countries outside of the U.S. That is why we have decided to do it.
We have selected eight countries outside the US where we believe we can launch Joenja and grow actually the drug in a profitable manner by having local operation in a lean fashion, but still having our local operation. This is what we will be attending to do. By saying eight, that does not mean that it is for sure that we are going to be operating in eight countries. It is a sequential launch. We have just launched it in the UK. We will see how it works. We expect to complete the filing in Europe early next year, and we will see how this will go and we will be able to update you. I think there is clearly value creation by having a very targeted approach to geographic expansion and being financially responsible. May I react on that?
Please.
If that is true for Joenja, why isn't that true for RUCONEST?
It's a great actually comment. RUCONEST has already been commercialized in many countries in the world with actually a price which is much, much lower than that of the US. As a consequence, it doesn't make actually a lot of sense to invest a lot actually behind this drug given actually the price level. When it comes to Joenja, what I've said is obviously contingent upon having an appropriate actually price on the market. Now, we are also living up our mission to patients, and regardless of having local operations, we are always striving to make our drug accessible across the world through access programs.
Now, if RUCONEST is so much more cheaper outside the U.S. than the U.S., are the comments of Donald Trump, are they a risk for us? Where he's saying, well, the U.S. should be paying the least of all countries in the world, which is not that unreasonable from his perspective.
It is true that they are, it's true and well documented that there are major differences in the cost of drug between the U.S. and Europe, but also other countries outside, I mean, in the world. It is also true actually that the cost of healthcare is much, much higher in the U.S. compared to the rest of the world. Drug costs just follow that pattern. There are many explanations for that, which I'll be very happy actually to discuss in greater detail with you, knowing that the healthcare system is completely different actually in the U.S. and in Europe. One of the major differences is that most of the U.S. healthcare system is a for-profit healthcare system, as in many countries across the world, these are actually nationally managed healthcare systems.
Is there a risk that what Trump is saying, that he's putting pressure on you, that in fact we are suffering because of the prices because we're selling outside the U.S., that we're suffering in the U.S. because of that, because the prices are so much higher in the U.S.?
Obviously, I mean, we do not have the details of any actions that the U.S. administration may decide to undertake, obviously. We are taking those comments very seriously. I think it is nothing related to Pharming specifically. I think it is something that is taken very seriously by the entire industry, and we are looking at ways to ensure that we can mitigate any risk on that regard. As I said, we are talking about very different systems. It is not necessarily fair to compare price from one country to another, and hopefully through dialogue with the U.S. administration, I believe that our industry will be able to engage and ensure that we have a sustainable model for patients to access treatments regardless of the countries they are.
Yeah. A final comment as far as this goes, I do know a little bit more about the inefficiencies of the U.S. model with all the middlemen and so on, and I think I understand the key issues of that. However, your position is different compared to the major pharmaceutical companies where maybe 60%-70% of the business is coming from the U.S., the rest is from outside of the U.S., so it's still profitable somehow. In our case, if 2% are coming outside of the U.S. as far as RUCONEST is concerned, it will be a damn shame if there's 2% destroying your 98% business. That's exactly the point I'm trying to make. It may be better not to do this, not to sell these 2% to protect the business in the U.S. That's the point I'm trying to make. I was just wondering.
I hear you, obviously, and we're looking at ways to mitigate again this legacy. We also need to bear in mind that these patients in those other countries are being treated with RUCONEST, and we won't be able to look at ourselves in the mirror if tomorrow, just overnight, we prevent those patients to access that treatment. By saying that, I'm not saying that we are just standing still and doing nothing. We are looking at avenues actually to mitigate the risks that you have been elaborating upon for the past few minutes.
Very clear. Thank you.
I would, which is also to recap, we are very diligent, we're paying attention. There's a lot of unknown, and for all of us in the industry, we just pay a lot of attention. We're working on contingency plans. We just had a board meeting. For instance, we had a number of presentation discussions around that. At the same time, we have to also wait and get a bit more clarity because things change quite rapidly right now in our world. Are there any other questions?
Yes, I see someone standing up.
Hello, good afternoon. My name is Joris van der Lan. I'm representing myself as a shareholder. I have three questions. The first one is on the first planning. The last update is that the trial has ended and the paper is submitted, it's under review. How does the process work if the review is done? Do you have immediate access to the patients or do you need to go to the insurance companies to negotiate that?
I'm not sure which trial you are talking about?
The US? You're talking about the VUS?
The VUS.
The US, okay. Yes, the VUS. Yes, go ahead.
You want me to right now?
Answer.
Okay, very good. When it comes to the VUS, as I said, these are patients which have been identified by the doctors as potentially APDS patients. They underwent a genetic test, and that test actually was unconclusive. There is not enough data actually to define whether the genetic variant that they have actually was linked to an increase in the PI3K delta signaling. These new data that are soon to be published actually will show that the proportion of these patients will be reclassified as APDS patients. Based on this data, which are going to be published, diagnostic lab will run actually those new data through their patient dataset. They will identify a number of patients that will have to be reclassified as APDS patients.
They're going to inform the doctors saying, "Hey, this patient, we told you it was VUS, we couldn't make any conclusion based on the genetic test, but now we can because those data was just published. Doctor, you may have actually read that publication." The doctor will contact the patients, and then it's going to be up to the doctor decision to see whether they want to initiate a treatment with Joenja. That's going to be how it's going to be. If you have the review is ready, then doctors to the patients, so that maybe takes a quarter and then you could even have some revenue this year if.
Absolutely. We expect actually, this is absolutely good. We expect to see actually a number of patients which are going to be reclassified actually to receive Joenja this year. Now, it's going to take a certain period of time, obviously, and so it's not a one-off opportunity. It's not like we'll see a body of patients this year, it's over. No. I mean, we'll see actually a number of patients coming back to the physician's office, and so this is something that will drive the growth. It's going to be a new growth lever for Joenja for several months.
Is this data valid for EU or Japan also?
Absolutely. These are data that will actually be able to be considered actually in other countries beyond the U.S.
Okay. Thank you.
I would add something. That is something I say all the time about rare disease companies, the rare disease space, and you are investors in a rare disease company like Pharming. This is a classical example of we basically are doing a public health service. Without us and without your support, these studies would not be happening and these patients would never be diagnosed and would never be reclassified and would never get access to a treatment. It is interesting in a rare disease space, unlike for instance the more common indications like cancer or hypertension, we know who these patients are. You just have to provide your drug and advertise your drug.
Here, you really have to do a lot of work and working together with investigators, researchers to try to better understand what's happening to the disease, who has the disease, who has been misdiagnosed, and then you build basically that in a way the pool of patients over time and we help them. It is a very interesting phenomenon that we only see in the rare disease space.
Another question. Jeroen Wakkerman, Slefter Company is CFO. When are you expecting to appoint a new CFO?
We are actually in the process of interviewing candidates, and obviously I will update the shareholders in due time when we are about to appoint a new CFO. We are working on it at the present time.
Okay. My last question is on the shareholder structure. At the last shareholders meeting, I also asked you a question on that. Today I was almost starting to count the number of times you said the word blockbuster because I was, oh, I never heard it so many times at the shareholders meeting, so it has my attention. Within the shareholder structure, is there also attention from investors already? You are actively communicating in the market that potential blockbuster, we have two in-house, as you were saying. Is there increased attention of investors already?
I mean, I'm very impressed actually with the attention of institutional investors. I've engaged with a number of them over the past few months. I was last week actually at the Jefferies Conference. We were invited actually to present the company, not only to meet with investors, and clearly we see a growing engagement. I guess the movement in the share price is reflecting that growing interest. To build on the question that you asked me three months ago, I was very new in my job. I can only confirm what I told you. I believe that as we grow as a company, it will be good to have the support of more institutional shareholders. My goal is to engage with them and hopefully to have more institutional long-term shareholders to invest in the company.
Yeah, we hope to see more AFM % notices because for now it seems that more the shorters have the overhand on the stock or maybe our bondholders, they also short the company to have some extra leverage on their bonds. Yeah, I hope to see this change in the future.
Thank you.
Thank you. Thank you very much. Any other questions on this agenda item? Yes.
I noticed that Pharming is on the right track with respect to several activities they are prolonging. I noticed over here the financial discipline, and I was wondering how the board is going to get shareholders' value in the future.
Yeah.
Because in the past, yeah, it lacks shareholders' value.
Yes. I will take that on. We are clearly keenly focused on that as a board. We believe that it is very important that we return value to shareholders. This has been a stepwise process. There have been a number of changes in the organization, in the company, refinement of the strategy, appointment of new directors on the board. You will hear more, one coming up soon. Succession, as Simon was retiring, we had to get a new CEO, the acquisition of Abliva. There have been a lot of things, and then of course the launch of Joenja. There have been a lot of things that we put in place to really start really building the momentum.
We're feeling that momentum now, and the intention is to keep that momentum going that you've heard from the presentation from Fabrice with a keen desire to really create more value for patients, but importantly also for shareholders. It is clearly top of mind.
Does your financial discipline also involve getting a small profit each and every year?
I mean, the financial discipline means maximizing the return on every dollar we invest. That is clearly my goal, and that is my commitment to you as a shareholder. I hope that this will actually percolate obviously through the bottom line.
Thank you.
Thank you very much.
Yes.
My name is Jeroen Steyn. I'm a shareholder of Pharming. I have a quick question. It's a bit strategic with a small link to financial discipline. A few years ago, Pharming decided to also list on the Nasdaq. Strategically, you would like to create shareholder value with increasing and high liquidity and trading volumes. Today, unfortunately, the trading volumes are very, very thin. The question is, how do you see this in the near or midterm future? Is it still going to provide value? I cannot imagine you're very pleased about the volumes we see today on Nasdaq. Of course, when I think about the direct and indirect costs linked to being listed, yeah, it's not in the millions, it's a few hundred thousand tops. How would you manage this going forward?
If you really want to be financially disciplined, is this something you consider to do something about it either way?
Listen, I welcome your question. I completely agree with you. We are not fully leveraging our Nasdaq listing today. It is coming obviously at a cost given the mandatory reporting linked to it. In the near term, we are going to have to make a decision. Either we decide to leverage it much more or to solely focus on our Euronext listing. This is something which is clearly on my priority list and hopefully, but this is not a decision that we can make hastily, obviously, in the coming year or so, I expect to provide you with an answer.
Okay. Thank you.
Thank you. Anyone else?
Great. Since I do not see any other questions in the room, oh, there is one. Oh, sorry.
Yeah, Keenan, I've got a second topic I would like to discuss. By the way, if I also would like to react on the previous question, I do hope and I do expect Pharming to be successful in attracting more institutional investors, certainly by becoming a more relevant company with a bigger pipeline that is finally being sold throughout the U.S., but also throughout the world. If you're successful, I think the Nasdaq listing is mandatory. It's stupid not to continue with that. However, if you're not successful, then it's indeed a waste of money. I would suggest not to make the decision in the next six months to stop any kind of listing, but making sure that you're continuing on your strategy, you're becoming more successful, and then we'll all be happy that the Americans know about the existence of Pharming as well.
Of course, the major increase could happen, will happen. I've got a different topic, a more negative topic, which is less strategic, but very operational. In the year 2023, you've been indicating that there were some internal control mechanism issues. In 2024, it's still being noted. More importantly, it's even indicated that Pharming cannot guarantee that the internal control mechanisms issues will have been resolved in the near term. I'm concerned about that, so maybe you could elaborate what are we talking about? Because I do remember many, many years ago having worked in the 1980s and the 1990s at a multinational company, American company, if there's one thing which could stop your career as a low-level supervisor, mid-level manager, or senior manager is having an internal auditor saying your organization is below acceptable, which means internal control mechanisms are not up to speed.
If you get a warning, you need attention, you've got three or six months, and then it needs to be under control. Now, considering that in 2023, Pharming has been indicating, has been informing us that there are some issues, serious issues here. 2024, they're still there. Why does it take so long? What is the issue here? Should we really be concerned or is this just something very trivial?
Yeah, Leon, as our Chair of our Audit Committee, of course, has been overseeing this with the management team. So it has the history from 2023 until now. Do you want to give anything?
Right. Yeah, I think the issue of internal control is of course related to our Nasdaq listing, right? Because we have to qualify for the SOX 404 control framework. I think a lot of work has been done on that, especially during the last year. It is not only a matter of having your controls in place, but it's also very important to then adhere to them and make sure that during the operational administrative tasks that you do, right, the controls are being honored. I regret to say that the controls are in place. We made big strides onto that. In the final analysis of our auditors, right, and ourselves, some of these procedures that would lead to a perfect score on the strength of our internal control systems were not met.
Therefore, as of the last fiscal year, we were again not qualified for SOX 404. Very unfortunate, I think we're almost there. I have almost no doubt that this year that will be met. It's taken longer than expected, but it is being accomplished right now.
If I would try to summarize the two types of internal control mechanisms issues, one is bureaucracy. I don't care about that. The other part, which means that you're not invoicing all the invoices that should be sent, you're not collecting all the money that you should have been collected. It means money could disappear, wrong organizations being invoiced, all those kinds of things. People are asking for some information, and these potential customers are not being addressed, are not being contacted. Those are the type of things which are much more serious and also are reflected at some point in your financial statements. Is my conclusion correct that we're talking here about bureaucracy? By its auxiliary things.
Bureaucracy by.
Is it something which is more fundamental?
Thank you. Bureaucracy by itself, right, is not the control. The controls that you define under the COSO risk framework are very specific and have to do with procedures eventually that have to be followed in order to make sure that overall you are assured as management that your accounts that you publish reflect the true reality. The effects that some of the things that you mentioned there are possible, but that would be really out of control, right, if you do not issue the invoices. This could be as simple as a specific document that needs to be signed off by the person that inputs it, and it is not signed off on all the documents. That by itself is a weakness, right? It is not so that your internal controls are completely deficient. The accountants provide two opinions, right?
The accountants will speak later, so maybe they can address that as well. One is on the fairness of the presentation of your balance sheet and your income statement. The other one is a separate opinion on the value and the accuracy of your internal control. There are very specific criteria for where you qualify, where you not qualify. I think we were there very, very close, and we had discussions about that. If certain points at the end of the year are not met, then you do not get the qualification.
Okay. Was there any connection to, because this has been taking longer than I think for sure that you would have wanted to, certainly than I would have expected to. Typically these kinds of things take six to nine months, and then they can be addressed unless it's very, very seriously a very serious issue, very, very fundamental. Were these kinds of issues that have been taking such a long time from 2023 until even today, and you still cannot guarantee that they will have been resolved in due time? Was there any connection to that and the departure of the previous CFO or even the departure of Mr. de Vries, who's still here? I assume not, but could you confirm that?
I cannot comment on that. I would leave that to our Chairman. The decision, right, to part with our CFO, who's pursuing other seats, was a management decision. I think it's not related to the state of the internal controls, no.
Yeah, absolutely. First of all, Simon de Vries decided to retire, and we have shared that before. Our CFO decided to pursue other opportunities. We left on good terms. I think, thank you for bringing up this control issue. We missed it by a hair at the end of the year, but we have to be honest, we missed it. We have basically had to disclose that. As Leon mentioned, we are quite confident that we have been really on the right track. We would have loved to complete it by the end of the year, but we just missed it slightly. I would just put it all in perspective. We made a lot of progress over time. It took longer. Part of that is because also maybe we were a little understaffed in the finance department.
In the end, we've been correcting this. Of course, Fabrice continues to make sure that's going to happen. You understand the reasons why I'm asking since I don't know your operations. What you're saying indeed is, it could have been, it should have been better, but there's nothing to worry about as far as the shareholders are concerned.
I agree.
Thank you very much.
I would agree, yeah.
Any other questions? Great. I would like to now close this agenda item and ask Steven Barr, the Chair of our Remuneration Committee, to present to you the remuneration report for the year 2024. This report is included in our annual report and on today's agenda item 2B. Steven?
Thank you, Richard. Good afternoon, dames and here. Good afternoon to our shareholders. On behalf of the remuneration committee, I will present to you the remuneration report of Pharming for the financial year of 2024. In this report, the remuneration committee reports on how the remuneration policy for the board of directors was implemented. The remuneration policy itself was adopted by our shareholders during the general meeting of shareholders that was held on May 21 of last year, 2024, and was approved with 94.2% of the votes cast. During that same meeting of shareholders, the remuneration report of the financial year 2023 was presented, and the remuneration committee really appreciates the strong positive vote of 95.6% of the votes that were cast in favor of the presented report.
Switching to this year, compared to the previous year, we have, first of all, reduced the size of this year's report on the financial year 2024 to make it easier to digest, whilst maintaining the same level of disclosure. We have also further improved the level of detail to explain the scores on the performance targets. These changes were made in response to the feedback that was received on last year's report from shareholders and from proxy advisors. We have engaged an external remuneration consultant to support us with these changes and analysis to ensure continuous alignment with prevailing best practices. Looking at the implementation of the remuneration policy for the year of 2024, the Remuneration Committee was, first of all, pleased to note that Pharming delivered strong financial performance in 2024 with record RUCONEST revenue and strong Joenja growth.
Management also performed well on several other targets that had been set for the year. You have heard from our CEO, Fabrice Chouraqui, earlier about that. The company ended 2024 on a strong note, growing total revenues by 21% to $297.2 million and exceeding the revenue guidance range that was set at $280 million-$295 million. In doing so, Pharming continued to deliver against its strategic objectives that are aimed at serving the unserved rare disease patients and developing a global leading rare disease company. If we translate these financial results into the short-term targets that had been set for Sijmen de Vries as our CEO throughout the year of 2024, the remuneration committee calculated a total score of 85.2% within an available range of zero to a maximum of 200% on all one-year financial and non-financial targets.
The summary of the financial results in 2024 for the short-term incentive plan is now being projected on the screen. These results reflect the company's strong financial performance over 2024. I also invite you to read the detailed scorecard on all financial and non-financial targets, which you will find on page 79 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 200%. Two hundred of 70 would be 140%. The remuneration committee therefore multiplied, and we do a little bit of math here, the total of 85.2% score that was given to the 70% on-target score. This resulted in a gross cash payment to Simon de Vries equal to 59.6% of his annual salary for 2024.
If we then switch to the long-term incentives, the conditional shares that had been awarded to Simon de Vries under the long-term incentive plan for the performance period 2022 to 2024 also vested. The vesting percentage is based on performance against the targets that were set in 2022 for the full three-year period, which were a combination of total shareholder return with a 40% weighting and also strategic corporate objectives with a 60% weighting. If we zoom in on the 40% weighting, first, on the score on the total shareholder return was 38%. This score was calculated based on the share price performance of Pharming over the performance period 2022-2024, compared to the ASCX and the IBB ETF indices, and applying the applicable vesting table. You will find much more detail on page 80 of the annual report.
For the corporate strategic objectives, so the second part of that, the remuneration committee concluded that 44% of 100 total was achieved, and that's within an available range of zero to maximum 200%. A detailed scorecard here can again be found on page 81 of the annual report. All of this results in a total vesting level of 82.4% for the long-term incentives within the available range of zero to maximum 300% vesting. Therefore, a total number of 1,947,487 shares vested for Simon de Vries under the long-term incentive plan for the performance period 2022 to 2024. Again, more details on the total remuneration package that Simon de Vries received for the year 2024 can be found on page 82 of the annual report.
I am sure that Simon de Vries will be happy that we will no longer be disclosing all these details on this compensation going forward, which brings me to the remuneration package of our new CEO, Fabrice Chouraqui, who is receiving an annual fixed salary of $750,000 for the year of 2025, as outlined on pages 84 and 85 of the annual report. During the exceptional general meeting that was held earlier this year on March 4th of 2025, our shareholders approved the remuneration package to the extent required with a 98.11% majority of the votes cast. On pages 84 and 85 of the annual report, you will also find a summary of the outstanding contractual rights of Simon de Vries as our former CEO, consistent with the information already shared with our shareholders for the EGM.
With that, we will now answer the questions that any of our shareholders may have with regards to the remuneration report.
Thank you, Steven. I would like to invite our other 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. Yes, please go ahead.
My name is Keenan. I speak on behalf of VB. Simple question. I read in your annual report that Mr. Simon de Vries waived his right for any kind of restricted shares for the performance period of 2025 and a few years later. Also, there was no severance payment or golden goodbye or whatsoever. Of course, I think that's logical, even though some companies don't apply this. The question I would have, he has waived the right, so this means, as a consequence, that your current policy would allow a departing CEO who departs voluntarily, end of his term or whatever, or he retires. He doesn't perform anything out of his own responsibility as CEO from 2025, 2026, 2027, or 2028. Would the current policy have granted him these kinds of things then? Because if so, I think the policy needs to change.
Thank you for the question. Simon de Vries had an employment contract with the company. In addition, there is the remuneration policy. When Simon indicated his wish to retire, we worked with him through the arrangements and reached a mutual agreement, which is the normal way of handling this. Given that he is still an employee to the company as an advisor that is on call to Fabrice Chouraqui, he is still employed, and therefore, the terms of his employment contract would have applied, and he could, under those circumstances, have been eligible to receive such a grant.
That doesn't mean that ultimately, at the end of the remuneration period, the compensation company would not have applied its discretion to decide what to allocate, but it's the specific circumstances that Simon is still employed by the company, and therefore, the terms of his employment contract still applied as he is an advisor. He was, of course, applying a lot of common sense and waived that under these circumstances.
Yes, that concerns the Barway. Congratulations, because that's the way it should be. You know there are several companies who don't do it like that. The more you pay as a CEO, the more golden handshakes you can receive, which doesn't apply for the guy who's working in the warehouse or the lady at the reception. I'm very much against these kinds of things. Congratulations to you and Mr. Simon de Vries. The second part, this concerns the restricted shares, but I assume the severance fee could not have applied at all, even though he stays as an advisor until the end of the year. Am I right?
Again, when you so we have here entered in an agreement that he would stay on as an advisor and it's correct that there is no severance to be paid here.
Thank you very much. Are there any other questions?
There are no other questions, Steven.
Ladies and gentlemen, this is also the end of my mandate. I have, unfortunately, decided that I will not stand for reelection, but I would like to sincerely thank you for the collaboration over the last few years. It has been a real pleasure, and I will miss Pharming, and I will very much miss my colleagues on the board and the executive team. Thank you very much.
Thank you, Steven. I'll make a few comments a little later, as both Steven and, as mentioned, Debbie, are now going to be up for reelection. We will now proceed with the voting on the remuneration report for the financial year of 2024. In accordance with the European Shareholder Rights Directive, as implemented in Dutch law, you are asked to cast an advisory vote. All votes in favor of the report mean that the remuneration report is appreciated and deemed positive. Any votes against the proposal are understood to imply that the report does not meet the expectations of these shareholders. The advisory vote will not be binding, but we will explain in next year's remuneration report how the vote of the general meeting was 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 would wish to vote against the proposal, or to press abstain if you do not wish to vote. These votes will not be included when determining the voting result. You'll 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 results will be shown on the screen. This will be done by adding up all the votes already received by means of proxy and the votes cast during this meeting today. The civil law notary will monitor this.
A total number of 875 shareholders and 61,900,026,894 shares is represented today and is entitled to vote on all items on the agenda. We will now proceed with the voting on the agenda item 2B. Our shareholders are proposed to give a positive advice on the presented remuneration report for 2024. I have now opened the voting. Please cast your votes now. I will now close the voting. The voting result will be shown on the screen in a few seconds. I'm pleased to confirm that the proposal has been approved with 98.88% for. The next item on the agenda is item 2C on corporate governance. Fabrice, could you please introduce this item and also the subsequent agenda item 2D for a summary of the dividend policy? We will address the questions of our shareholders on both sub-items after your introduction. You don't have that?
No. Where is it?
No, I don't have. Sorry for this. Thank you so much, Richard, for that. Sorry for this little confusion. Agenda item 2C has been included to update our shareholders on material development 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 requirements. Inter alia, as announced on April 30, 2025, Pharming filed that same day its annual report for 2024 on Form 20-F with the U.S. Securities and Exchange Commission. You can find that document on our website.
In addition, we've taken further significant steps in 2024 for implementing an enhanced internal control framework to ensure compliance with our company with the U.S. Sarbanes-Oxley Act. On page 47 of the annual report, you will find an outline on how Pharming has applied the Dutch Corporate Governance Code in 2024. Compared to 2023, we removed the deviation from the Dutch Corporate Governance Code that refers to the requirement to draw up a policy to facilitate a dialogue with relevant stakeholders of the company on the sustainability aspects of our long-term strategy. This policy is now available on our company website. 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 our company. No new deviations have been reported since last year.
As for the dividend policy, the agenda item 2D, Pharming continues to follow its existing policy not to pay dividends. The Board of Directors does not envision the payment of dividends in the coming year. Payment 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 development. Thank you, Fabrice. Now, we will now entertain questions around corporate governance and the dividend policy. Are there any shareholders in this room who would like to ask questions on this agenda item? Please go to one of the microphones, of course, like we've done before. Announce yourself. If you represent shareholders, please mention that. Also, we ask you to limit to no more than three questions at a time. Yes.
Yeah, my name is Keenan. I speak on behalf of VB. I've got two questions. First question is, you already know, and I suspect I know the answer already since I've been asking it every single year. In your search for a new CFO, are you at least now considering or moving towards having the CFO as part of the director, as part of the executive board? That's my first question.
[audio distortion] No.
[audio distortion] Clear?
The same logic, the same explanation as previous years.
The logic of the previous year.
Okay. The second question that concerns the VB, we consider corporate governance extremely important, and the board dynamics are very important, and also the evaluation, how the board is functioning, especially as a single-tier board, which is not the standard in the Netherlands. It's fine. We don't have an issue with that. Also, last year, you did a self-evaluation, and I read in your annual report, some of the positive findings, very interesting. I'm not sure I could read also the negative findings. Are they secret, or didn't I read carefully enough?
I mean, our Chair of the Nomination and Governance Committee can answer.
We have done an external review, I believe it was two years ago, with an external party. Before that, we had a two-year questionnaire as well. What we found was that we could improve our relationship between the executive committee and the board, and we've been working on that since. It is really nice to see that our results really improve. I would not say we are perfect yet, and luckily, otherwise, the world becomes very boring. That was one area where we really stepped up our efforts. The other thing where we really stepped up our efforts was becoming very clear after each board meeting, what have we discussed, and especially what have we agreed to ensure that what the board understood the action was, the executive committee also was clearly informed of.
We are now doing that both during the process and clearly in writing after the process. We focused more on the, how would I call it, how we do stuff to ensure that the relationship continued to devolve. Another example, which I really like, and we did something yesterday in the pouring rain. We said, as an exco and as non-executive board members, we should really know each other well. We have, as you know, board members in the U.S., in Europe, and we do not see each other on a regular basis, not on a frequent basis. We see each other regularly, but not frequently. We also agreed that when we come together, we really make an effort to do something active next to our, of course, our dinners and our lunches.
Yesterday, just for your entertainment, we managed to find the two hours of rain in this whole week, and we wandered the streets of Leiden. It was very entertaining and enjoyable. It bonded us together because we all were under the same umbrellas. It is that type of, so we really are trying to optimize how we do the work we do and that we are speaking with one voice, that we are critical, that it can be challenging, but at the same time, we always know we are all there for the same purpose, and that is to deliver the results that Pharming is going after as per our vision and our aspiration.
Thank you very much.
Thank you. Are there any other questions? Great. We will now proceed with the next agenda item, the financial statements of 2024, as included in agenda item 2E. The financial statements can be found on page 106 and onwards 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 17th, 2023. Deloitte has issued an unqualified auditor's report for the financial statements 2024. Please refer to pages 171 and up, including 176 of the annual report. I would like to invite Ms. Louise Zwama [Boombake], a partner at Deloitte, to present the highlights and main findings that followed from the audit by Deloitte. Louise.
My name is Louise Swama [Boombake], audit partner at Deloitte, and it's my pleasure to present the scope of our procedures and the results that are offered to you as shareholders of Pharming. In summary, we issued our unqualified independent auditor's report on April 2nd of this year. We performed certain procedures to verify that the management report, including the remuneration report, complies with the requirements of the Dutch Civil Code and the Dutch Standard 720. In our auditor's report, we reported one key audit matter. This key audit matter relates to the US revenue rebate accruals, and the other area of focus was refinancing of the convertible bond, which was effectuated in the first half of 2024. We performed full scope procedures for significant entities, which results in high coverage of 98% of revenues and 95% of total assets.
The materiality that we used in the audit was based on revenue and amounted to $3.8 million. We used the same benchmark being revenue as in prior years. The materiality increased due to the increase in revenue. We reported misstatements to management and those charged with governance in excess of $189,000. We met regularly with the board of directors and the audit committee during the year and issued an audit plan and also a year-end report before we issued our auditor's opinion. Let's move to materiality and scoping on the next slide. We used a group materiality as a set of $3.8 million. However, we also used a lower materiality in performing the procedures at the component level with a maximum of $2.2 million.
We scoped in and performed procedures on the significant accounts for a number of entities, being Pharming Group, the holding entity, Pharming Americas, Pharming Technologies, Research and Development, Healthcare, and Brookman Institute. As I said, this resulted in a high coverage in both revenues and total assets. I will now explain the procedures we performed around the key audit matter of the US revenue rebate accruals. As indicated, this key audit matter was also reported in the 2023 financial statements, and our procedures focused around the assumptions and judgments made by management in estimating the accrual. We evaluated the appropriateness and the consistency of the company's method, data assumptions used to calculate the revenue rebate accrual in accordance with IFRS 15, including evaluating the historical trends of the rebates to assess any indications of any changes in those trends.
We also tested the mathematical accuracy of the accrual, and we also tested significant assumptions and key inputs used to calculate the accrual. We also tested a sample of rebate claims that were received during 2024, but also after year-end, to source documentation and also assess the reasonableness of management forecast. We also performed retrospective reviews by comparing actual claims in 2024 to historical estimates. Our procedures did not result in any reportable material matters. I would like to move to our interaction with the board of directors and the audit committee. As I said, we issued two reports to those charged with governance, the audit plan, and also the report to the audit committee, which also included our management letter observations. Before issuance of the audit report, we discussed audit findings, misstatements, and also confirmed our independence and shared our observations.
Throughout the year, we met frequently with the board and the audit committee, even outside of the set meetings. In the audit, we used a number of specialists in the area of share-based compensation, valuation of preference shares, valuation of convertible bonds, taxes, and fraud specialists. None of these areas where we involved specialists resulted in a key audit matter. Internal control and IT, and hopefully, I can also address your question or concern. We assessed the controls relevant to the audit, and because we also issue a specific internal control opinion on annual report on Form 20F, we also tested the operating effectiveness of those controls. As was explained by the CEO, the company implemented a comprehensive internal control plan to remediate most of the material weaknesses.
If you look at the annual report on Form 20F and also the internal control statement item 15, you will see that several of those material weaknesses were actually remediated, and only material weaknesses remained to exist in two specific areas. One was in relation to taxes, and the other one is in relation to complex non-routine transactions with a significant accounting impact. As management has explained, they are in the process of remediating those deficiencies so that they can further improve in their control framework. This is disclosed on page 34 of the annual report. With respect to IT, we engaged with IT auditors to identify, analyze, and also test general IT controls and application controls. Also, cybersecurity is part of our risk assessment. I would like to move to fraud risks.
Auditors are required to pay specific attention to fraud risks in the audit, and we have identified the fraud risk in relation to management's override of controls. This is a presumed risk that you identify in each audit. It's prescribed by our standard. We performed a mix of procedures and involved fraud specialists to tailor the procedures to the specific situation of Pharming. In our auditor's report, you can also read the specific procedures in relation to this fraud risk. Now, Pharming is operating in a highly regulated industry. Therefore, compliance with laws and regulation is an important element in the audit. We made inquiries, read minutes, obtained legal letters, and performed other procedures to address this area.
With respect to growing concern, we obtained management assessment and performed procedures on the reasonableness of the assumptions used and whether all information that was known to us was considered and also reviewed the outlook. This was a high-level summary of the procedures that we have performed in relation to the audit of the financial statements, and more information can be read in the auditor's report, which starts on page 171 of the annual report. With respect to the audit of 2025, we expect to apply a similar audit approach, obviously also considering the acquisition of Abliva. This concludes my presentation, and happy to answer any questions that you might have.
Thank you, Louise. Are there any shareholders in this room who would like to ask questions on this agenda item? Again, please go to the microphone and identify yourselves.
Yeah, Keenan on behalf of VB. This question will not surprise you at all. I've understood your reply on the concerns. I was reading out of your annual report related to internal control mechanisms and now understand better it's primarily related to Sarbanes-Oxley, which is a huge effort I noticed from other companies as well. There may be one lucky point. Trump may be the one who's stopping with all of that, but anyway, I hope he doesn't, but he is also not a big fan of this kind of, well, controls, bureaucracy, many would say. Now, could the auditor confirm that we as shareholders should not be concerned indeed about that the company has missed it by a hair to really be compliant with all the internal control mechanisms which are obliged by Sarbanes-Oxley and so on? Is this indeed something more or less trivial indeed?
Can we just continue sleeping well and hoping that the strategy works well with Pharming? That is one confirmation we'd like to hear from the auditor, whether she's as positive, as confident as the company itself has just been communicating to us.
Yes, in a sense that there were many material weaknesses in all of the composite components in 2023, and the company has made a tremendous effort to remediate most of those material weaknesses. As I said, there are two areas where it remained. Mainly had to do with transactions that took place in the last quarter where misstatements were identified that have been addressed and corrected in the financial statements. Those areas, yeah, are being improved and also a remediation plan is in place, which is also disclosed in the annual report that is submitted for the SEC. I think the company has the right mindset to address those issues. I think if they continue on this path, then the end of the year looks much brighter than previous years.
Yeah. Considering that one thing which I'm still a little bit reluctant of saying, hooray, should not worry about this at all, is that the company itself is indicating we cannot guarantee that remaining two issues in this case will have been resolved in due time. That makes me somehow suspicious. How complicated can it be since you've been working on it for at least two years now? The focus will for sure be on this. You do not want to have issues with Sarbanes-Oxley or whatever in the U.S. Why isn't this also a key audit matter, by the way? If the issue has been found, in 2023, there's some serious issues, as you've been confirming now again, hasn't been fully resolved in 2024, and the company cannot confirm that it will have been resolved very, very soon after maybe more than two years.
Why isn't this a key audit matter? I'm not sure I can stop with my suspicion that there may be something more wrong than maybe it's presented so far.
The fact that this is not a key audit matter has to do with the fact that they also have a reporting requirement in the US, and it would be very strange to have a critical audit matter that we need to report in the US that differs from a key audit matter that we need to report in Europe. That is why those are aligned and how you define a critical audit matter in a US context is in relation to financial statement line items, and therefore you cannot point it to internal controls. We might have considered if they would have only had a listing in Europe to have a key audit matter on internal controls two years ago, but then they would also not have SOX 404 requirements. Yeah, that is the reason that you want to align for both shareholder groups the same audits.
Yeah, but I would say if you're trying to graduate at two schools at the same time and they've got different standards and you fail at one of those two schools, it would still be a key audit matter. It would be still a very big concern if the company hasn't been or the student wouldn't have been successful in graduating in two years.
Yeah, I think it's our policy to align those two critical audit matters with the key audit matters.
Look, I think, look, you're entitled to your own opinion. It sounds like you've already decided that you have your own opinion, which is fine. We understand your point. I think we've basically worked with our auditors and you've seen the report that has been presented here. I think I don't believe that we can continue debating this matter since we may have a difference of opinion. We can take that offline if you'd like as well. Actually, I don't have an opinion whatsoever. I'm trying to determine what the value is of the information the company is communicating to us. You're indicating there's a problem.
I would have just answered the question.
Yeah, yeah. If there is an issue which has not been solved after more than two years, I would assume that it gets a higher priority, that the company is not able to address such an issue within three, six, or nine months. The fact that the company has been able for these last two issues, especially if it is complex issues, which obviously take more time, it is more cumbersome. I am surprised, however, that this does not come as a key audit matter or that you are fairly relaxed saying, you know, overall, they have been working very hard. There were many, many issues in 2023. Most of them have been resolved. The last two, not yet, but hopefully at the end of this year, they will be resolved. I am somehow surprised, but I do not have an opinion because I do not know what is happening behind the scenes.
That's why I'm asking these kinds of questions.
No, I understand. I think we've answered them. Management answered them. I think auditors answered them.
What is important that you said we should not worry, and I think I hear out of your comments that we should not worry as shareholders about this topic indeed.
Yeah, and I think maybe to add to that, we also issued an unqualified auditor's report to the financial statements. Those are free of material misstatements. Hopefully that gives you also comfort that even though material weaknesses exist in two specific areas, the financial statements present a true and fair view.
Thank you very much.
All right. Any other questions? Good. Will we now proceed with the voting on the financial statements? Our shareholders are proposed to adopt the financial statements for the financial year of 2024. Thank you again, Louise. 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, press against if you wish to vote against the proposal, or press abstain if you do not wish to vote. These votes will not be included when determining the voting result. I will now open 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 99.8%, 81% majority. The financial statements for the financial year of 2024 have been adopted. On behalf of the entire board of directors, I would like to thank our management and all of our employees of Pharming for their dedication and congratulate them on the results achieved in the year 2024. The next topic on the agenda is item 2F, the proposal to discharge the members of the board of directors for the exercise of their duties during the financial year of 2024, as far as this is reflected in the annual report, in the financial statements, any other public disclosures, or in statements made during this general meeting. As a result, the members of the board of directors are released from potential legal action or claims by the company based on their actions while in office.
The proposed discharge, of course, also extends to Simon de Vries for the exercise of his duties as Executive Director and CEO during the financial year 2024. I would like to invite our shareholders to ask their questions on this agenda item. Please again go to one of the microphones and identify yourself. I do not see that there are any questions, so we'll now 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 year of 2024. I'll now open the voting and invite our shareholders in this meeting to cast their votes. I will now close the voting. Again, the voting results, including the votes received by means of the 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 93.67% majority. We will now proceed to the third item on the agenda, the appointment of Dr. Elaine Sullivan as our new executive director. The terms of Deb Yorn, Jabine van der Meijs, Leon Kramer, and Steven Barr as non-executive directors are scheduled to expire at the closing of today's AGM. The nominations for the reappointment of Jabine and Leon are on the agenda under the next item, item 4. Regretfully, Deb Yorn and Steven Barr are not available for reappointment. Deb has served as our vice chair since 2019 and has been a member of our audit committee and remuneration committee. By the way, she's online right now. Steven is chair of the remuneration committee and also a member of the corporate governance committee.
Deb had already indicated back in 2023 to be available for personal reasons for reappointment for a term of two years only. Stephen had to decide not to be available for reappointment today in view of the increasing time constraints in combining his membership to the board of directors of Pharming with his role as Chief People Officer and member of the executive committee at GE Vernova, a leading energy transition company. On behalf of the entire board of directors, I would like to thank both Deb and Stephen for their great commitment to Pharming over the past years and their valuable roles on the board and the committees. Again, thank you so much. I have the pleasure to inform you that the board of directors has decided to appoint Mark Pickett, who is also online, as the new vice chair as a successor to Deb Yorn.
I would like to ask Jabine van der Meijs as our Chair of the Corporate Governance Committee to explain to you the search process that was conducted and that resulted in the nomination of Elaine Sullivan as new Non-Executive Director. Jabine?
Thank you, Richard. Welcome to all the shareholders and good afternoon. The search process was designed to nominate a new non-executive director with experience in the U.S., EU, and international biopharmaceutical industry, including knowledge and experience in the area of product development, clinical development, and innovation. During the search, we also duly considered the need that the board of directors as a collective would retain the expertise and experience to effectively discharge all allocated tasks and responsibilities as a one-tier board, adequately reflecting the main markets that Pharming is active in. Based on the search process that was conducted, the board of directors unanimously concluded that Dr.
Elaine Sullivan fully meets the search profile in view of her deep experience in the international biopharmaceutical industry, including her global R&D leadership experience and her international non-executive director board experience in public companies in Sweden, Norway, Denmark, Germany, and in the UK. The composition of the board of directors following the appointment of Elaine will continue to reflect and support Pharming's strong growth ambitions and be fully consistent with the collective profile of the board of directors. Elaine will also become a member of the audit committee and the remuneration committee as successor to Deb Yorn. As mentioned in the explanatory notes, the appointment of Elaine is not restricted by limitation imposed by Dutch law on the maximum number of outside directorship. Elaine holds no shares in Pharming today.
I would now like to invite Elaine to introduce herself to you and to explain her main considerations for joining Pharming's board of directors. Elaine, the floor is yours.
Thank you, Jabine, and good afternoon to everyone. My name is Elaine Sullivan, and I would like to take the opportunity to introduce myself and why I was so excited to join this board. It is a real privilege to be considered to join the board of directors of Pharming with the impact that they have with the patients. That was the whole draw for me, was the product pipeline and also the impact of the patients. I am also privileged. I feel that the team, I spent the last two days with them, they are so directed at creating fantastic care for the patients, and they have a razor focus, not only the board, but the executive team and the whole broader team. You can actually feel it when you are meeting with them in the last two days.
I feel really privileged that if I get voted in to be a part of this board. My career started when I studied molecular biology at the University of Glasgow and then did a PhD in molecular virology at the University of Edinburgh. I spent over 30 years of international experience working in the pharma and biotech industry. I was a member of the top senior R&D management teams at Eli Lilly in the US for many years and AstraZeneca working in the UK. At Lilly, I was Vice President of Global External Research and Development, where my role was to identify and acquire compounds to augment the Lilly pipeline. In addition, I was a member of the investment committees of Lilly Ventures, Lilly Asian Ventures, and a member of the steering committee of Lilly's Capital Fund Partners.
I had a team in Japan, India, China, US, and Europe. In addition, I spent over 15 years at AstraZeneca. It feels like 50, I can promise you, where I held several senior executive roles, including the position of Vice President R&D of new opportunities. In this role, what I was directed to do by the CEO was to look across the whole pipeline that AstraZeneca had produced and see if we could really monetize, but also expand to the broader patients. What we did is we looked at the oncology portfolio and realized it could probably have fantastic impact with eye disease, serious eye disease. We reprofiled. We looked in the animal experiments and we also in the clinical, and we managed to create a really nice pipeline that was licensed to Alcon.
In addition, we had an inflammation pipeline that was very exciting, and we realized that this could impact really serious skin disease. We did a whole lot of experiments, reprofiled, and then did a big deal with Galderma to move some of the inflammation compounds into dermatology. They went on to proceed to be very successful in the clinic. In addition, I also held the role of Head and Vice President of Science and Technology. You have heard from everyone today, it is very, very difficult to identify a compound against a target, to get that through the clinic, for it to be tolerated by the patients and be kind to the patients. What I did was I looked with my team across the world of technology, both external to biotech and like NASA technology, also technology from security to bring lots of technologies together.
At the very early stage, we can identify the best compounds that we could get into the clinic and reduce the huge attrition that was in the clinic. That reduced the attrition in AstraZeneca significantly with the combination of these technologies. It was an absolutely fantastic and very innovative job. I thoroughly enjoyed it. After Lilly, I decided to set up my own company. As many members here have seen many people dying of cancer, I wanted to set up an oncology, including my own father. What I realized was that what I wanted to identify was compounds that were kind to patients. I had nursed a number of my family members that had terrible side effects. What I did then with my own father, he was given six weeks to live when he had stomach cancer.
I looked around to see if I could, with my colleagues, because I was working in cancer, identify any technologies and drugs together that could maybe save him. What we did was we identified technology at MD Anderson, and it was a pump that was able to put 5FU through his stomach constantly. Normally 5FU is very toxic, but if you do it at low doses and then you put a bolus of another set of chemotherapy, and he fully responded and he lived for years. That has always given me that incentive and why coming to pharma is there's technology and there's compounds out there and together with the investors and with the patients, we hope to create a kinder and better sets of pipeline.
That's what I see in Pharming, that dedication and also incredibly clever people, as you see from the pipeline they already have. That's just briefly. I just want to thank you again for the opportunity to be considered as a board member for this incredible company.
Thank you very much, Elaine.
Thank you very much, Elaine. Dear shareholders, I'm pleased to inform you that the Dutch Works Council submitted a positive advice with regard to the proposed appointment of Elaine Sullivan. The advice of the Works Council is part of the meeting documents for today's meeting. I would like to invite the Chair of the Works Council, Mr. Zhen Liu, to explain the advice on behalf of the Works Council. Zhen, the floor is yours.
Dear shareholders, dear board members, good afternoon, good midday. On behalf of the Dutch Works Council, I would like to thank you for involving us in the process regarding the nomination of the new members of the Pharming board of directors. The Works Council recognizes the importance of maintaining continuity and stability on the board to ensure the board can continue to effectively deliver the company's strategy. The nominated candidate, Dr. Elaine Sullivan, held multiple senior leadership roles in global companies and has a strong track record of cross-cultural leadership. Furthermore, the nominated candidate possesses a deep understanding of the entire business spectrum with strong developmental experiences. Based on this understanding, the Dutch Works Council would like to express its full support for the nomination of Dr. Elaine Sullivan. In accordance with the vet of the unnamed slot, we issue a positive opinion regarding the intended decision of appointing Dr.
Elaine Sullivan as Non-Executive Director till 2029. We appreciate the continuous collaboration and transparency throughout this important process. Thank you all. Thank you.
Thank you, Zhen.
Thank you, Zhen. I would now like to invite our shareholders in this room to ask their questions on the nomination of Elaine Sullivan. Please go to one of the microphones for that. As mentioned by our Chair during the opening remarks, I kindly ask you to state your name and, if applicable, the name of the shareholder you represent. Please do not ask more than three questions at the same time. Are there any questions? I believe there are no other questions. I presume we move forward to the voting.
Thank you very much, Jabine. As explained in the explanatory notes to the agenda for today's meeting, the board proposes to appoint Dr. Elaine Sullivan by binding nomination as a non-executive director as of the closing of this AGM for a term of four years, expiring at the closing of the annual general meeting of shareholders to be held in the year 2029. In accordance with Pharming's articles of association, the binding nomination may only be rejected with a simple majority of the votes cast, provided that these votes represent at least one-third of the issued capital. If the 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 may be convened. During that new meeting, the nomination can 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 vote on the proposal to appoint Dr. Sullivan. 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 99.8% majority. Congratulations, Elaine. We're delighted to welcome you to our board. Under the next agenda item, item four, we present a proposal to our shareholders to reappoint Jabine van der Meijs and Leon Kramer as our non-executive directors. As mentioned earlier and as explained in the explanatory notes, their respective terms are scheduled to expire at the closing of today's general meeting. Jabine and Leon were first appointed to the board of directors on May 19th, 2021.
Jabine van der Meijs is also the chair of the corporate governance committee and a member of both the audit committee and the remuneration committee. Leon Kramer is also chair of the audit committee and a member of the transaction committee. The board is pleased that both Jabine and Leon have indicated to be available for reappointment, as this will enable the board to continue to benefit from their knowledge and experience in the coming years. The board of directors has assessed the performance of both Jabine and Leon over the past four years and reached a positive conclusion. The board also assessed that Jabine and Leon 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 a binding nomination to reappoint Jabine van der Meijs and Leon Kramer as non-executive director for a period of four years, expiring at the closing of the annual general meeting to be held in 2029. The Works Council submitted a positive opinion regarding the proposed reappointment of Jabine and Leon. The documents summarizing the Works Council's point of view are part of the meeting documents for today's meeting. I would like to reinvite the chair of our Works Council, Ms. Zhen Liu, for an explanation of the opinion of the Works Council. Zhen.
Dear shareholders and dear board members, on behalf of the Dutch Works Council, I would like to thank you for involving us in the process regarding the nomination of reappointment of two members of Pharming's board of directors. The Works Council recognizes the importance of maintaining continuity and stability on the board to ensure the board can continue to effectively deliver on the company's strategy. We appreciate both Ms. van der Meijs and Mr. Kramer have made themselves available for reappointment. Their continued presence on the board will support the company's stability and continuity, given their deep experience with Pharming and strong understanding of the strategic direction. Based on this understanding, the Dutch Works Council would like to express the full support for the nominations of the reappointment of Ms. van der Meijs and Mr. Kramer.
In accordance to the vet of the unnamed slot, we issue a positive opinion regarding the intended decision to reappoint Ms. van der Meijs and Mr. Kramer as non-executive directors till 2029. We appreciate the continued collaboration and transparency throughout this important process. Thank you all. Thank you.
Thank you very much, Zhen. I propose that we now answer the questions that our shareholders may have regarding these two appointments. I do not see any questions, so we will now move on to voting on the proposals presented under this agenda item each time by binding nomination. 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 Jabine van der Meijs by way of a 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 am pleased to confirm that the proposal has been adopted by our shareholders with a 90.95% majority. Congratulations, Jabine. Oops, sorry. I'm now opening the voting. Oh, yeah. I'm now opening the voting on the proposal to reappoint Leon Kramer by way of binding nomination for a period of four years. I will now open the voting, please. I will now close the voting. The voting result, including here it is, it's just the votes by means of proxy are now shown on the screen.
I'm very pleased to also confirm that the proposal has been adopted by our shareholders with a 95.15% majority. Congratulations, Leon. We will now move on to the next agenda item, item five on the proposed reappointment of Deloitte as external auditor for the financial year 2025. Leon, could you please introduce this agenda item as Chair of the Audit Committee?
Yes, sir. Deloitte Accountants B.V. has continuously acted as our external auditor for the last six years. With the current recommendation to reappoint Deloitte for an additional one-year term, this will be seven years total. The Audit Committee may consider a change in independent auditors in the future as part of the regular committee's governance practice, including periodic consideration of firm rotation.
Any future decision to change auditors would follow a thorough evaluation process, which may include the so-called request for proposal and include other firms as well as Deloitte.
I'm now inviting any of the shareholders in this room to go to one of the microphones to ask any of the questions around this reappointment. I don't see any questions, so thank you, Leon. We will now move on to the voting on the proposal presented under agenda item number five. We propose that our shareholders reappoint Deloitte Accountants B.V. as external auditor for the financial year 2025 and to instruct Deloitte to, first, examine the annual report and the financial statements for the financial year 2025. Second, to report on their audit to the audit committee and the board of directors. Third, to issue related auditor's statements.
I'm now opening the voting and invite our shareholders in this room to cast their votes on this proposal. I will now close the voting. The voting results, including the votes received by means of proxy, are being shown on the screen. I'm pleased to confirm that the proposal has been adopted by our shareholders with a 99.79% majority. The next item on the agenda is item number six, 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, shares issuance under the remuneration policy for 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 21, 2024. I'm now inviting our shareholders in this room to go to one of the microphones to ask their questions. There are no questions in the room, so I'm now inviting our shareholders in this room to go to one of the microphones to ask—oh, sorry, I just did that.
We'll now move on to the voting on the proposal presented under agenda item six. This proposal 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 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 97.01% majority. The next item on the agenda is agenda item number seven.
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 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 21, 2024. I would like to invite our shareholders to ask their questions. Are there any questions on this agenda item? There are no questions in the room, so I will now move 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 up to 10% of the issued capital. This proposal is described, as I said, 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 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 98.6% majority. The final agenda item, number eight, is any other business. This agenda item will address the questions that are of a more generic nature. Please go to one of the microphones if you have any questions.
Since there are no questions in the room, I am now going to close this meeting and thank you all for your attendance today, your participations, and your questions. I would now like to invite our shareholders present in this meeting room to join us for drinks in the foyer. We will also seize this opportunity for a farewell reception for Simon de Vries. I also want to thank our shareholders who have attended this call via the webcast and by phone and online, and of course, our members of the boards who joined also online. We look forward to meeting all of you again soon during one of our webinars or one of our many planned corporate events. Thank you so very much.