UPDATE 2-Pharming launches exchange for 2007 convertibles

* Offer is for 2007 convertible bonds

* Offering cash, stock mix at approximate 20 pct discount

* Seeking at least 60 pct take-up for conversion

* Would result in more than one-third dilution * Shares down 1.4 pct

(Adds background, share price reaction)

By Ben Berkowitz

AMSTERDAM, Sept 21 (Reuters) - Dutch biotech firm Pharming (PHAR.AS) said on Monday it has launched an offer to exchange convertible bonds it issued in 2007 for a mix of cash and stock at a discount of nearly 20 percent.

Pharming said the exchange would improve its financial position, which has been the primary concern of some analysts. Its equity stood at 8 million euros as of June 30 and in July it said it would focus in the short term on improving its finances.

The shares were down 1.25 percent at 0.551 euros by 0709 GMT. The stock last traded above 1 euro in September 2008.

"We feel the offer towards the bondholders can be considered as reasonable (given) the company's very weak cash position and the lack of alternative options for these bondholders," KBC Securities analysts said in a note.

The conversion would exchange each bond, with a nominal value of 50,000 euros, for 7,500 euros in cash and 59,000 shares. At Friday's close of 55.8 cents per share, the offer values each bond at 40,442 euros.

Pharming said it will complete the exchange if at least 60 percent of the outstanding bonds are tendered. To convert all of the outstanding bonds Pharming said it would have to pay 5.37 million euros in cash and issue 42.24 million shares.

The company had 115.79 million shares outstanding as of Sept. 11.

Pharming Chief Executive Sijmen de Vries, in a statement described the exchange as a "fair offer" that would help the company improve its financial condition and shift its focus to its key products.

Pharming said on Sept. 3 it had lodged its highly-anticipated application for marketing approval for its lead product Rhucin with the European Medicines Agency (EMEA).

The EMEA has twice rejected Pharming's application to market Rhucin, which treats hereditary angioedema, characterised by a painful swelling of the skin, intestine, mouth and throat.

Pharming, which produces therapeutic proteins in the milk of genetically modified animals, has benefited from government funding and capital from investment funds.

KBC estimated Pharming would need to raise 25 million to 30 million euros more to support a Rhucin launch and sustain the company until it turned profitable. (Reporting by Ben Berkowitz, additional reporting by Aaron Gray-Block; Editing by Greg Mahlich)