On November 5, 2020 Puma Biotechnology, Inc. (NASDAQ: PBYI), a biopharmaceutical company, reported financial results for the third quarter ended September 30, 2020 (Press release, Puma Biotechnology, NOV 5, 2020, View Source [SID1234570070]). Unless otherwise stated, all comparisons are for the third quarter of 2020 compared to the third quarter of 2019.

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Product revenue, net consists entirely of sales revenue from NERLYNX, Puma’s first commercial product. Net NERLYNX revenue in the third quarter of 2020 was $49.3 million, compared to $53.5 million in the third quarter of 2019. Net NERLYNX revenue in the first nine months of 2020 was $146.7 million, compared to $152.9 million in the first nine months of 2019.

Based on accounting principles generally accepted in the United States (GAAP), Puma reported a net loss of $31.5 million, or $0.79 per share, for the third quarter of 2020, compared to a net loss of $16.9 million, or $0.44 per share, for the third quarter of 2019. Net loss for the first nine months of 2020 was $45.0 million, or $1.14 per share, compared to a net loss of $64.4 million, or $1.67 per share, for the first nine months of 2019.

Non-GAAP adjusted net loss was $23.9 million, or $0.60 per share, for the third quarter of 2020, compared to non-GAAP adjusted net loss of $4.7 million, or $0.12 per share, for the third quarter of 2019. Non-GAAP adjusted net loss for the first nine months of 2020 was $17.9 million, or $0.45 per share, compared to non-GAAP adjusted net loss of $18.6 million, or $0.48 per share, for the first nine months of 2019. Non-GAAP adjusted net loss excludes stock-based compensation expense. For reconciliations of GAAP net loss to non-GAAP adjusted net loss and GAAP net loss per share to non-GAAP adjusted net 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 2020 was $1.7 million, compared to net cash used in operating activities of $7.3 million in the third quarter of 2019. Net cash provided by operating activities for the first nine months of 2020 was $6.4 million, compared to net cash provided by operating activities of $20.8 million in the first nine months of 2019. At September 30, 2020, Puma had cash, cash equivalents and marketable securities of $109.0 million, compared to cash, cash equivalents and marketable securities of $111.6 million at December 31, 2019.

"During the third quarter Puma continued to be negatively impacted by the challenges presented by COVID-19. Given these challenges, we were pleased that we were able to achieve revenues that were within the previously stated third quarter guidance range of net NERLYNX revenues," said Alan H. Auerbach, Chairman, Chief Executive Officer and President of Puma. "Although we anticipate that COVID-19 may continue to impact our revenues going forward, we remain focused on and committed to providing support to patients battling breast cancer. Our team has continued to work remotely and continues to respond to any COVID-related challenges, and we are pleased with the accomplishments made by the team during this pandemic. During the third quarter, we announced the publication of updated interim results of the Phase II CONTROL trial in Annals of Oncology as well as the publication of overall survival results from the Phase III ExteNET Trial in patients with HER2-positive, hormone receptor-positive, early stage breast cancer in Clinical Breast Cancer, which we believe further reinforces the benefits of neratinib."

Mr. Auerbach added, "We anticipate the following key milestones over the next 12 months: (i) reporting Phase II data from the SUMMIT trial of neratinib in hormone receptor positive breast cancer patients with HER2 mutations in the fourth quarter of 2020; (ii) reporting additional data from the Phase II CONTROL trial in the fourth quarter of 2020; (iii) reporting Phase II data from the SUMMIT trial of neratinib in bile duct cancer patients with HER2 mutations in the first quarter of 2021; (iv) reporting Phase II data from the SUMMIT trial of neratinib in non-small cell lung cancer patients with EGFR exon 18 mutations in the first half of 2021; (v) conducting a pre-NDA meeting with the FDA to discuss accelerated approval of neratinib in HER2 mutated hormone receptor positive breast cancer and HER2 mutated cervical cancer in the first half of 2021; (vi) reporting data from the Phase II TBCRC-022 trial of the combination of Kadcyla plus neratinib in patients with HER2-positive breast cancer with brain metastases who have previously been treated with Kadcyla in the first half of 2021; (vii) conducting a meeting with the FDA to discuss the potential for an accelerated approval pathway for neratinib in non-small cell lung cancer patients with EGFR exon 18 mutations who have been previously treated with an EGFR tyrosine kinase inhibitor in 2021; and (viii) receiving regulatory decisions for an extended adjuvant HER2-positive early stage breast cancer indication in additional countries in 2021."

Revenue

Total revenue consists of product revenue, net from sales of NERLYNX, Puma’s first commercial product, license revenue and royalty revenue. For the third quarter of 2020, total revenue was $50.8 million, of which $49.3 million was net product revenue and $1.5 million was royalty revenue from Puma’s sub-licensees. This compares to total revenue of $56.4 million in the third quarter of 2019, of which $53.5 million was net NERLYNX revenue, $2.8 million was license revenue, and $0.1 million was royalty revenue from Puma’s sub-licensees. For the first nine months of 2020, total revenue was $172.6 million, of which $146.7 million was net product revenue, $22.7 million was license revenue, and $3.2 million was royalty revenue from Puma’s sub-licensees. This compares to total revenue of $209.3 million for the first nine months of 2019, of which $152.9 million was net product revenue, $56.2 million was license revenue, and $0.2 million was royalty revenue from Puma’s sub-licensees.

Operating Costs and Expenses

Total operating costs and expenses were $62.9 million for the third quarter of 2020, compared to $70.8 million for the third quarter of 2019. Operating costs and expenses in the first nine months of 2020 were $191.8 million, compared to $239.7 million in the first nine months of 2019.

Cost of Sales

Cost of sales was $10.0 million for the third quarter of 2020 and $28.4 million for the first nine months of 2020, compared to $9.4 million for the third quarter of 2019 and $26.7 million for the first nine months of 2019.

Selling, General and Administrative Expenses

Selling, general and administrative (SG&A) expenses were $29.6 million for the third quarter of 2020, compared to $31.4 million for the third quarter of 2019. SG&A expenses for the first nine months of 2020 were $89.9 million, compared to $110.4 million for the first nine months of 2019. The $20.5 million year-over-year decrease resulted primarily from decreases in stock-based compensation expense of approximately $9.4 million, professional fees and expenses of approximately $7.0 million and travel and meetings expense of approximately $4.4 million.

Research and Development Expenses

Research and development (R&D) expenses were $23.3 million for the third quarter of 2020, compared to $30.0 million for the third quarter of 2019. R&D expenses for the first nine months of 2020 were $73.5 million, compared to $102.6 million for the first nine months of 2019. The $29.1 million year-over-year decrease resulted primarily from decreases in clinical trial expense of approximately $16.5 million, stock-based compensation expense of approximately $9.3 million and consultant and contractor expenses of approximately $3.4 million.

Total Other Income (Expenses)

Total other expenses were $19.4 million for the third quarter of 2020 and $25.8 million for the first nine months of 2020, compared to total other expenses of $2.5 million for the third quarter of 2019 and $34.0 million for the first nine months of 2019. The $16.9 million increase in total other expenses for the three months ended September 30, 2020, compared to the three months ended September 30, 2019, was largely attributable to a legal verdict expense of $15.9 million. During the third and fourth quarters of 2020, we obtained additional data, previously unavailable, from the claims report relating to our class action lawsuit, which asserted damages in the amount of $50.5 million. While we intend to challenge some of these claims, we have increased our estimate of the legal accrual to $24.8 million. This resulted in the additional $15.7 million legal expense during the third quarter of 2020. The $8.2 million year-over-year decrease in total other expenses resulted primarily from decreases in interest expense of approximately $1.4 million, legal verdict expense of approximately $0.4 million and debt extinguishment loss of approximately $8.1 million and an increase in other income of approximately $0.2 million, partially offset by a decrease in interest income of approximately $1.9 million.

Conference Call

Puma Biotechnology will host a conference call to report its third quarter 2020 financial results and provide an update on the Company’s business and outlook at 1:30 p.m. PST/4:30 p.m. EST on Thursday, Nov. 5, 2020. The call may be accessed by dialing 1-877-709-8150 (domestic) or 1-201-689-8354 (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.