On November 3, 2022 Puma Biotechnology, Inc. (NASDAQ: PBYI), a biopharmaceutical company, reported that financial results for the third quarter ended September 30, 2022 (Press release, Puma Biotechnology, NOV 3, 2022, View Source [SID1234622971]). Unless otherwise stated, all comparisons are for the third quarter of 2022 compared to the third quarter of 2021.
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Product revenue, net consists entirely of sales revenue from NERLYNX, Puma’s first commercial product. Product revenue, net in the third quarter of 2022 was $54.3 million, compared to $43.4 million in the third quarter of 2021. Product revenue, net in the first nine months of 2022 was $146.3 million, compared to $138.1 million in the first nine months of 2021.
Based on accounting principles generally accepted in the United States (GAAP), Puma reported a net loss of $0.4 million, or $0.01 per share, for the third quarter of 2022, compared to a net loss of $44.7 million, or $1.09 per share, for the third quarter of 2021. Net income for the first nine months of 2022 was $5.6 million, or $0.13 per basic and diluted share, compared to a net loss of $33.4 million, or $0.82 per share, for the first nine months of 2021.
Non-GAAP adjusted net income was $2.5 million, or $0.05 per basic and diluted share, for the third quarter of 2022, compared to non-GAAP adjusted net loss of $40.4 million, or $0.99 per share, for the third quarter of 2021. Non-GAAP adjusted net income for the first nine months of 2022 was $14.8 million, or $0.33 per basic and diluted share, compared to non-GAAP adjusted net loss of $5.0 million, or $0.12 per share, for the first nine months of 2021. Non-GAAP adjusted net income (loss) excludes stock-based compensation expenses. For a reconciliation of GAAP net income (loss) to non-GAAP adjusted net income (loss) and GAAP net income (loss) per share to non-GAAP adjusted net income (loss) per share, please see the financial tables at the end of this news release.
Net cash provided by operating activities for the third quarter of 2022 was $17.3 million, compared to net cash provided by operating activities of $10.5 million in the third quarter of 2021. Net cash used in operating activities for the first nine months of 2022 was $23.5 million, compared to net cash provided by operating activities of $26.1 million in the first nine months of 2021. On September 30, 2022, Puma had cash, cash equivalents, and marketable securities of $78.0 million, compared to cash, cash equivalents, and marketable securities of $82.1 million at December 31, 2021.
"We are very pleased to report $54.3 million in NERLYNX revenues in the third quarter of 2022," said Alan H. Auerbach, Chairman, Chief Executive Officer, and President of Puma. "This is being driven by the U.S. commercial revenues from NERLYNX and our commercial execution, which is designed to support increased patient access to NERLYNX. This past quarter we also presented updated results from the Phase II SUMMIT basket trial of neratinib for HER2-mutant, recurrent/metastatic cervical cancer at the 2022 European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) Congress and we recently reported Phase II data from the cohort of patients in the SUMMIT basket trial of neratinib in non-small cell lung cancer patients with EGFR exon 18 mutations at the EORTC/NCI/AACR Molecular Targets and Cancer Therapeutics Symposium. Puma remains committed to developing treatments for cancer patients, and in September we were pleased to have in-licensed alisertib, an aurora kinase A inhibitor, which we plan to develop initially for the treatment of hormone receptor-positive breast cancer as well as small cell lung cancer. We will continue evaluating both neratinib and alisertib across a number of cancer indications."
Mr. Auerbach added, "We anticipate the following key milestones over the next 12 months: (i) reporting Phase II TBCRC-022 trial data from Cohort 4B and 4C of the combination of Kadcyla plus neratinib in patients with HER2-positive breast cancer with brain metastases who have previously been treated with Kadcyla (H2 2022); (ii) publication of the biomarker studies from the randomized trial of alisertib plus fulvestrant versus alisertib alone in hormone receptor positive, HER2 negative breast cancer (Q4 2022); (iii) biomarker data from the randomized trial of alisertib plus paclitaxel versus paclitaxel alone in hormone receptor positive, HER2 negative breast cancer (H1 2023); (iv) reporting data from an ongoing investigator sponsored Phase I/II trial of alisertib plus pembrolizumab for the treatment of patients with Rb-deficient head and neck squamous cell cancer (2023); (v) conducting a meeting with the FDA to discuss the registration pathway of neratinib in HER2-mutated HR-positive breast cancer (H1 2023); (vi) conducting a meeting with the FDA to discuss the registration pathway for neratinib in non-small cell lung cancer patients with EGFR exon 18 mutations who have previously been treated with an EGFR tyrosine kinase inhibitor (H1 2023); and (vii) conducting a meeting with the FDA to discuss the registration pathway for alisertib in hormone receptor positive, HER2 negative breast cancer and small cell lung cancer (H1 2023)."
Revenue
Total revenue consists of product revenue, net from sales of NERLYNX, Puma’s first commercial product, license revenue from Puma’s sub-licensees and royalty revenue. For the third quarter of 2022, total revenue was $57.1 million, of which $54.3 million was product revenue, net and $2.8 million was royalty revenue. This compares to total revenue of $46.2 million in the third quarter of 2021, of which $43.4 million was product revenue, net and $2.8 million was royalty revenue. For the first nine months of 2022, total revenue was $162.4 million, of which $146.3 million was product revenue, net and $16.1 million was royalty revenue. This compares to total revenue of $197.8 million for the first nine months of 2021, of which $138.1 million was product revenue, net, $50.3 million was license revenue received from Puma’s sub-licensees, which included a $50 million upfront payment for providing development, manufacturing, and commercial rights to NERLYNX in Greater China to Pierre Fabre, and $9.4 million was royalty revenue.
Operating Costs and Expenses
Total operating costs and expenses were $54.7 million for the third quarter of 2022, compared to $55.2 million for the third quarter of 2021. Operating costs and expenses in the first nine months of 2022 were $148.7 million, compared to $203.3 million in the first nine months of 2021.
Cost of Sales
Cost of sales was $12.5 million for the third quarter of 2022, compared to $10.3 million for the third quarter of 2021. Cost of sales was $38.3 million for the first nine months of 2022, compared to $51.8 million for the first nine months of 2021, of which $20.0 million was a termination fee paid to a former sub-licensee for the return of commercial rights to NERLYNX in Greater China.
Selling, General and Administrative Expenses
Selling, general and administrative (SG&A) expenses were $24.0 million for the third quarter of 2022, compared to $26.1 million for the third quarter of 2021. SG&A expenses for the first nine months of 2022 were $64.9 million, compared to $93.8 million for the first nine months of 2021. The $28.9 million decrease in SG&A expenses for the first nine months of 2022 compared to the first nine months of 2021 resulted primarily from a decrease in payroll and related costs of approximately $8.9 million, consisting of approximately $7.0 million from lower headcount and a $2.0 million payroll tax credit under the CARES Act; and a decrease in stock-based compensation expense of approximately $17.0 million, primarily due to the $13.6 million incremental expense resulting from the modification to the term of Mr. Auerbach’s warrant in 2021, as well as approximately $3.4 million due to the impact of lower headcount. Additionally, professional fees and expenses decreased by approximately $2.8 million, due primarily to a decrease of approximately $6.3 million in consultancy efforts related to marketing and commercialization support, partially offset by an increase of approximately $3.8 million in legal fees.
Research and Development Expenses
Research and development (R&D) expenses were $11.2 million for the third quarter of 2022, compared to $18.8 million for the third quarter of 2021. R&D expenses for the first nine months of 2022 were $38.5 million, compared to $57.7 million for the first nine months of 2021. The $19.2 million decrease in R&D expenses for the first nine months of 2022 compared to the first nine months of 2021 resulted primarily from a decrease in clinical trial expense of approximately $8.5 million, primarily due to the reduction in the number of patients in certain clinical trials; a decrease in internal R&D expenses of approximately $6.3 million; a decrease in consultant and contractor expense of approximately $2.4 million, primarily due to the close of the CONTROL study and a reduction in the number of patients being treated in the SUMMIT study; and a decrease in stock-based compensation expense of approximately $2.1 million, primarily due to the impact of lower headcount.
Acquired In-Process Research and Development Expense
In September 2022, the Company entered into an exclusive license agreement with Takeda Pharmaceutical Company Limited to in-license the worldwide research and development and commercial rights to alisertib. The Company recorded acquired in-process research and development expense related to the up-front payment of $7.0 during the three months ended September 30, 2022.
Total Other Income (Expenses)
Total other expenses were $2.7 million for the third quarter of 2022, compared to $35.7 million for the third quarter of 2021. Total other expenses were $7.9 million for the first nine months of 2022, compared to $27.7 million for the first nine months of 2021. The $19.8 million decrease for the first nine months of 2022 compared to the first nine months of 2021 resulted primarily from net reductions in legal verdict expense of $9.8 million, $8.1 million in loss on debt extinguishment related to our debt refinancing in July 2021, and a decrease of $1.8 million in lower interest expense related to our outstanding debt.
Full Year 2022 Financial Outlook
Puma increased its financial guidance for full year 2022 to reflect improvements in U.S. demand for NERLYNX and changes to the timing of shipments to Puma’s international partners.
Conference Call
Puma Biotechnology will host a conference call to report its third quarter 2022 financial results and provide an update on the Company’s business and outlook at 1:30 p.m. PDT/4:30 p.m. EDT on Thursday, November 3, 2022. The call may be accessed by dialing (877) 709-8150 (domestic) or (201) 689-8354 (international). Please dial in at least 10 minutes in advance and inform the operator that you would like to join the "Puma Biotechnology Conference Call." A live webcast of the conference call and presentation slides may be accessed on the Investors section of the Puma Biotechnology website at View Source A replay of the call will be available shortly after completion of the call and will be archived on Puma’s website for 90 days.