On May 9, 2019 Puma Biotechnology, Inc. (NASDAQ: PBYI), a biopharmaceutical company, reported financial results for the first quarter ended March 31, 2019 (Press release, Puma Biotechnology, MAY 9, 2019, View Source [SID1234536050]). Unless otherwise stated, all comparisons are for the first quarter 2019 compared to the first quarter of 2018.

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Product revenue, net consists entirely of sales revenue from NERLYNX, Puma’s first commercial product. Net NERLYNX revenue in the first quarter of 2019 was $45.6 million, compared to net NERLYNX revenue of $36.0 million in the first quarter of 2018.

Based on accounting principles generally accepted in the United States (GAAP), Puma reported a net loss of $10.1 million, or $0.26 per share, for the first quarter of 2019, compared to a net loss of $24.3 million, or $0.65 per share, for the first quarter of 2018.

Non-GAAP adjusted net income was $8.1 million, or $0.21 per basic share and $0.20 per diluted share, for the first quarter of 2019, compared to non-GAAP adjusted net income of $1.1 million, or $0.03 per basic share and $0.02 per diluted share, for the first quarter of 2018. Non-GAAP adjusted net income excludes stock-based compensation expense, which represents a significant portion of overall expense. For a reconciliation of GAAP net loss to non-GAAP adjusted net income and GAAP net loss per share to non-GAAP adjusted net income 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 2019 was $16.1 million, compared to $6.3 million in the first quarter of 2018. At March 31, 2019, Puma had cash and cash equivalents of $48.8 million and marketable securities of $101.6 million, compared to cash and cash equivalents of $108.4 million and marketable securities of $57.0 million at December 31, 2018. Puma’s cash and cash equivalents at March 31, 2019 did not include a $60.0 million upfront license payment that was received in April 2019. At March 31, 2019, the $60.0 million upfront license payment was recorded in accounts receivable.

"Puma experienced lower than expected net product revenue in the first quarter of 2019," said Alan H. Auerbach, Chairman, Chief Executive Officer and President of Puma. "This reduction in net revenues was the result of an increase in expenses charged against gross revenue for the quarter. Additionally, net product revenue declined in the quarter as a result of an increase in patients discontinuing treatment with NERLYNX."

Mr. Auerbach added, "During 2019, we anticipate the following key milestones for Puma: (i) presenting data from the Phase III trial of neratinib in third-line metastatic breast cancer patients in the second quarter of 2019; (ii) filing a new drug application for neratinib based on the results of the Phase III trial in third-line metastatic breast cancer in the summer of 2019; (iii) meeting with the FDA to discuss the clinical development and regulatory strategy for the SUMMIT trial in the summer of 2019; (iv) receiving regulatory decisions for the extended adjuvant HER2-positive early stage breast cancer indication in other countries in the second half of 2019; (v) reporting additional data from the Phase II CONTROL trial in the second quarter of 2019; and (vi) reporting Phase II data from the SUMMIT basket trial in patients with HER2 mutations in the second half of 2019."

Revenue

Total revenue consists of product revenue, net from sales of NERLYNX, Puma’s first commercial product, and license revenue. For the first quarter ended March 31, 2019, total revenue was $99.1 million, of which $45.6 million was net NERLYNX revenue and $53.5 million was license revenue received from Puma’s sub-licensees. This compares to total revenue of $66.5 million in the first quarter of 2018, of which $36.0 million was net NERLYNX revenue and $30.5 million was license revenue.

Operating Costs and Expenses

Total operating costs and expenses were $89.2 million for the first quarter of 2019, compared to $89.9 million for the first quarter of 2018.

Cost of Sales:

Cost of sales was $8.0 million for the first quarter of 2019, compared to $6.4 million for the first quarter of 2018.

Selling, General and Administrative Expenses:

Selling, general and administrative expenses were $45.5 million for the first quarter of 2019, compared to $36.6 million for the first quarter of 2018. The $8.9 million increase resulted primarily from increases of approximately $6.8 million for professional fees such as legal fees and marketing and commercial support, approximately $0.9 million related to employee stock-based compensation expense, approximately $0.7 million in payroll and payroll related expenses, and approximately $0.4 million in travel and meeting-related expenses.

Research and Development Expenses:

Research and development (R&D) expenses were $35.7 million for the first quarter of 2019, compared to $46.9 million for the first quarter of 2018. The $11.2 million decrease resulted primarily from decreases of approximately $8.1 million of stock-based compensation, $2.1 million in internal R&D primarily related to payroll and payroll related expenses, $1.5 million in clinical trial expenses primarily due to external clinical service, external manufacturing, testing and logistics, partially offset by increases in CRO-related expenses, grant expenditures and comparator drug expenses.

Total Other Income (Expenses)

Total other expenses were $20.0 million for the first quarter of 2019, compared to total other expenses of $0.9 million for the first quarter of 2018. Other expense recorded in the first quarter of 2019 includes $16.4 million related to a March 2019 jury verdict against Puma in a defamation lawsuit, Eshelman v. Puma Biotechnology, Inc., et al., and represents $22.4 million in damages awarded to the plaintiff, net of a $6.0 million anticipated insurance receivable. Puma intends to appeal the verdict and has filed a motion for a new trial or, in the alternative, a reduced damages award. The plaintiff has also filed motions seeking attorneys’ fees and pre-judgment interest. The total amount of damages to be paid by Puma remains subject to the exhaustion of post-trial motions and appeals.

Conference Call

Puma Biotechnology will host a conference call to report its first quarter 2019 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, May 9, 2019. 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.