DD Investment Thesis: Pharming Group
Pharming Group is a pharmaceutical company listed as PHARM on Euronext and as PHAR (ADR) on the NASDAQ. The company develops treatments for rare diseases and currently has only one treatment approved. Pharming Group offers a rare opportunity. The company has had consistent positive Net income over the past couple of years but its increasing expected earnings has not yet been priced it.
The share value has changed by over NEGATIVE 50% since Jan 2020, yet its revenue for treatment of acute HAE (Ruconest) has increased and future treatments have moved further down the pipeline increasing their likelihood of approval. Based on 2020 year results the company trades at a very low EV/P ratio. Revenues from its cash cow HAE are still increasing. Therefore I must conclude that the latest “Expected earnings”” and successful developments are not yet priced in. Considering that market conditions… even with a war in Ukraine… have not dramatically changed for the company while the internal developments of the company have progressed, I must conclude that the company is currently undervalued.
I suspect that once more earnings become tangible, as a result of a 2nd pipeline product successfully passing all stages of the pipeline ,that the larger market will begin to notice the potential of the company. In late 2022 this is expected to occur. The most likely product is Leniolisib which is an Orphan Drug that currently has passed Phase 3 clinic trials and is waiting for regulatory approval for the treatment of APDS.
When the Leniolisib receives regulatory approval this year (approx 85% likelihood) and new revenues start kicking in; the share price will explode. According to my personal model, Initially, it should be a 2-4x bagger, but through the large amount of excess cash -> acquisitions and further developments in the pipeline could be realised and turn in it to a “many’-bagger.
This is not financial advice. Please see it as a starting point to do your down DD and build this thesis into a nice financial model.
Submitted March 15, 2022 at 09:54PM by svenz1997
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