BioWorld International Correspondent

Pharming NV, a Dutch firm that specializes in the production of pharmaceuticals in the milk of transgenic animals, is on the brink of exiting its legal moratorium, following overwhelming creditor support for a proposed settlement and new financing of €8.2 million.

The move is subject to court approval, and a decision is expected on Oct. 10. "What the court is doing this week is checking that we have fulfilled all legal requirements," Pharming Chief Business Officer Rein Strijker told BioWorld International. Barring any appeals, the formal termination of the legal moratorium would follow on Oct. 19.

The Leiden-based company raised €5.2 million in a private placement with a group of undisclosed investors based in the UK, Germany and the Benelux region. Management also participated in the transaction. The placing was priced at €0.80 per share, which represents a small discount to its average trading price over the preceding six months of €0.86. It had raised €1.8 million of that total during the second quarter through short-term convertible loans. The company also has obtained a €3 million line of credit, which it will use to settle its debts. It has additional financial commitments in the form of warrants with a strike price of €0.80, which could provide an extra €1.3 million.

More than 90 percent of Pharming's creditors endorsed its offer, and nobody actively opposed it, Strijker said. The company will honor in full its debts to small creditors, while larger creditors will receive approximately 75 percent of what they are owed. In total, it will pay out between €4 million and €5 million, he said.

Once it has put the moratorium behind it, Pharming will explore three alternatives for further financing over the next nine months. They include raising cash through a new share issue, out-licensing one or more of its projects or entering a strategic alliance with a larger player. "We are looking at all the options in a very open way," Strijker said.

It currently has five "engines of growth," he said. Its lead drug candidate, a recombinant form of human C1 inhibitor for treatment of hereditary angioedema, will enter Phase II trials shortly. The company also is revisiting an older program based on a recombinant form of lactoferrin. Originally, that was in development as a nutraceutical, but the company is now investigating its potential as an anti-infective.

"If we move it forward, we will do it with somebody else," Strijker said. The company also is developing recombinant forms of fibrinogen and collagen for surgical applications. Finally, it also is open to out-licensing its transgenic animal technology.

The company has spent most of the past year executing its turnaround. Strijker believes it has learned valuable lessons. "We completely restructured and reorganized the company, with a much stronger focus on the products we're trying to develop, with a much stronger focus on the markets we're trying to reach, with a much stronger focus on the financials of the company," he said. "If you look around, both in the U.S. and Europe, you'll see a lot of companies still burning cash at very high rates [and] going in several directions."

Following the recent transactions, including the elimination of certain liabilities through the conversion of short-term loans to equity, Pharming has approximately 31 million shares outstanding. By late Tuesday, its shares were trading at €1.04 on the Euronext in Amsterdam.