On May 9, 2018 Puma Biotechnology, Inc. (NASDAQ: PBYI), a biopharmaceutical company, reported financial results for the first quarter ended March 31, 2018 (Press release, Puma Biotechnology, MAY 9, 2018, View Source [SID1234526389]).
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Unless otherwise stated, all comparisons are for the first quarter 2018 compared to the first quarter 2017.
On July 17, 2017, Puma Biotechnology received approval from the U.S. Food and Drug Administration (FDA) for NERLYNX (neratinib) for the treatment of early stage HER2-positive breast cancer following adjuvant trastuzumab-based therapy, and the Company began shipment to wholesalers at the end of July 2017. Prior to the launch of NERLYNX the Company had no product revenue. Net product revenue from sales of NERLYNX in the first quarter of 2018 amounted to $36.0 million, compared to net product revenue of $6.1 million and $20.1 million in the third and fourth quarters of 2017, respectively.
Based on accounting principles generally accepted in the United States (GAAP), Puma reported a net loss applicable to common stock of $24.3 million, or $0.65 per share, for the first quarter of 2018, compared to a net loss applicable to common stock of $72.9 million, or $1.97 per share, for the first quarter of 2017.
Non-GAAP adjusted net income was $1.1 million, or $0.03 per basic share and $0.02 per diluted share, for the first quarter of 2018, compared to non-GAAP adjusted net loss of $43.1 million, or $1.16 per basic and diluted share, for the first quarter of 2017. Non-GAAP adjusted net income (loss) excludes stock-based compensation expense, which represents a significant portion of overall expense and has no impact on the cash position of the Company. For a reconciliation of GAAP net loss to non-GAAP adjusted net income (loss) and GAAP net 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 used in operating activities for the first quarter of 2018 was $6.3 million. At March 31, 2018, Puma had cash and cash equivalents of $78.6 million, compared to cash and cash equivalents of $81.7 million at December 31, 2017.
"We made substantial progress in the commercialization of our lead product, NERLYNX (neratinib), during the first quarter of 2018," said Alan H. Auerbach, Chairman, Chief Executive Officer and President of Puma. "We quickly built momentum in the U.S. market, with net sales steadily rising since our launch. Our exclusive licensing agreements to date, with Pint Pharma in Latin America, CANbridge in mainland China and Taiwan, Medison Pharma in Israel, and Specialised Therapeutics Asia in South East Asia, demonstrate our commitment to also make NERLYNX accessible to patients globally while we continue to grow the U.S. market.
"We are also pleased with the updated National Comprehensive Cancer Network (NCCN) guidelines, which designate NERLYNX as a recommended combination treatment option for breast cancer patients with brain metastases. In addition, data on neratinib were published in the journal Nature, which included initial results from Puma’s ongoing SUMMIT Phase II ‘basket’ clinical trial in patients with tumors harboring HER2 or HER3 mutations. SUMMIT is designed to evaluate the contributions of both genetic mutation and cancer type on individual patient response to neratinib. Information generated from the trial will help guide neratinib-based targeted therapy across a broad spectrum of tumor types with HER2 or HER3 mutations, including patients with rare tumors who may not otherwise have access to investigational therapies. We believe the publication of the initial SUMMIT data in this prestigious journal reflects the novelty and quality of this precision-medicine trial design, as well as the growing understanding that both tumor type and gene mutations play an important role in individual patients’ response to cancer therapies such as neratinib."
Mr. Auerbach added, "During 2018, we anticipate the following key milestones: (i) reporting updated Phase I/II data from neratinib plus Kadcyla (T-DM1) in the HER2-positive metastatic breast cancer trial in the second quarter of 2018; (ii) re-assessment of the Marketing Authorisation Application for neratinib by the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) in mid-2018; (iii) reporting data from the Phase III trial in third-line metastatic breast cancer patients in the second half of 2018; (iv) submitting for regulatory approval for the extended adjuvant HER2-positive early stage breast cancer indication in select countries in the second half of 2018; and (v) reporting additional data from the Phase II CONTROL trial in the fourth quarter of 2018."
Revenue
Total revenue consists of net product revenue from sales of NERLYNX, Puma’s first and only commercial product to date, and license revenue. The FDA approved NERLYNX for commercial sale in the United States in July 2017 and the Company commenced shipment to wholesalers in late July. For the first quarter of 2018, total revenue was $66.5 million, of which $36.0 million was net product revenue and $30.5 million was license revenue received from Puma’s sub-licensees.
Operating Expenses
Operating expenses were $89.9 million for the first quarter of 2018, compared to $73.2 million for the first quarter of 2017.
Cost of Sales:
Cost of sales was $6.4 million for the first quarter of 2018. The Company had no product sales prior to the third quarter of 2017.
Selling, General and Administrative Expenses:
Selling, general and administrative expenses were $36.6 million for the first quarter of 2018, compared to $18.4 million for the first quarter of 2017. The $18.2 million increase resulted primarily from increases of approximately $7.8 million in payroll and related costs, $6.6 million in marketing, market access, and legal expenses, $1.7 million in travel and related costs, and $1.7 million in stock-based compensation. These increases reflect the commercial launch of NERLYNX and overall corporate growth.
Research and Development Expenses:
Research and development (R&D) expenses were $46.9 million for the first quarter of 2018, compared to $54.8 million for the first quarter of 2017. The $7.9 million decrease resulted primarily from decreases of approximately $6.1 million for stock-based compensation and $4.0 million for clinical trial expenses, partially offset by an increase of $2.2 million for payroll and related costs in medical affairs and commercial quality assurance. For our existing clinical trials, we expect R&D expenses to decrease in subsequent quarters as clinical trials continue to wind down.
Conference Call
Puma Biotechnology will host a conference call to report its first quarter 2018 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 Wednesday, May 9, 2018. The call may be accessed by dialing 1-877-709-8150 (domestic) or 1-201-689-8354 (international) at least 10 minutes prior to the start of the call and referencing 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 approximately one hour after completion of the call and will be archived on the company’s website for 90 days.