On August 5, 2021 Puma Biotechnology, Inc. (NASDAQ: PBYI), a biopharmaceutical company, reported that financial results for the second quarter ended June 30, 2021 (Press release, Puma Biotechnology, AUG 5, 2021, View Source [SID1234585882]). Unless otherwise stated, all comparisons are for the second quarter of 2021 compared to the second quarter of 2020.

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Product revenue, net consists entirely of sales revenue from NERLYNX, Puma’s first commercial product. Net NERLYNX revenue in the second quarter of 2021 was $48.9 million, compared to $48.8 million in the second quarter of 2020. Net NERLYNX revenue in the first six months of 2021 was $94.7 million, compared to $97.4 million in the first six months of 2020.

Based on accounting principles generally accepted in the United States (GAAP), Puma reported a net loss of $5.1 million, or $0.13 per share, for the second quarter of 2021, compared to net income of $3.4 million, or $0.09 per basic share and $0.08 per diluted share, for the second quarter of 2020. Net income for the first six months of 2021 was $11.3 million, or $0.28 per share, compared to a net loss of $13.5 million, or $0.34 per share, for the first six months of 2020.

Non-GAAP adjusted net income was $13.1 million, or $0.32 per share, for the second quarter of 2021, compared to non-GAAP adjusted net income of $14.0 million, or $0.36 per basic share and $0.35 per diluted share, for the second quarter of 2020. Non-GAAP adjusted net income for the first six months of 2021 was $35.4 million, or $0.88 per basic share and $0.87 per diluted share, compared to non-GAAP adjusted net income of $6.0 million, or $0.15 per share, for the first six months of 2020. Non-GAAP adjusted net income excludes stock-based compensation expense. For a reconciliation of GAAP net income (loss) to non-GAAP adjusted net income and GAAP net income (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 second quarter of 2021 was $0.1 million, compared to net cash provided by operating activities of $16.2 million in the second quarter of 2020. Net cash provided by operating activities for the first six months of 2021 was $15.6 million, compared to net cash provided by operating activities of $4.7 million for the first six months of 2020. At June 30, 2021, Puma had cash, cash equivalents and marketable securities of $108.9 million, compared to $93.4 million at December 31, 2020.

"We were pleased to achieve sequential growth in NERLYNX sales in the second quarter of 2021. Importantly, this marks the first quarter that we have shown sequential unit growth since 2019," said Alan H. Auerbach, Chairman, Chief Executive Officer and President of Puma. "We also recently received an important label expansion, which adds dose escalation of NERLYNX for HER2-positive early stage and metastatic breast cancer patients. Utilization of this recommended dosage schedule has shown improved overall tolerability of NERLYNX, thereby enabling patients and physicians to optimize treatment and reduce therapy-related tolerability issues. We look forward to increasing awareness of this within the breast cancer community."

Mr. Auerbach added, "We anticipate the following key milestones over the next 12 months: (i) reporting top line data from the randomized cohort of the Phase II SUMMIT trial of neratinib in hormone receptor positive breast cancer that has a HER2 mutation (Q4 2021); (ii) conducting a pre-NDA meeting with the FDA to discuss accelerated approval of neratinib in HER2-mutated hormone receptor positive breast cancer

(Q4 2021); (iii) 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 (H2-2021/H1 2022); (iv) reporting Phase II data from the SUMMIT trial of neratinib in non-small cell lung cancer patients with EGFR exon 18 mutations (H1-2022); (v) 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 previously been treated with an EGFR tyrosine kinase inhibitor (2022); (vi) reporting Phase II data from the SUMMIT trial of neratinib in cervical cancer patients with HER2 mutations (H1-2022); and (vii) receiving regulatory decisions for the extended adjuvant HER2-positive early stage breast cancer indication in additional countries (2021)."

Revenue

Total revenue consists of product revenue, net from sales of NERLYNX, license revenue and royalty revenue. For the second quarter of 2021, total revenue was $53.4 million, of which $48.9 million was net product revenue, $0.2 million was license revenue received from Puma’s sub-licensees and $4.3 million was royalty revenue. This compares to total revenue of $70.6 million in the second quarter of 2020, of which $48.8 million was net product revenue, $20.7 million was license revenue received from Puma’s sub-licensees and $1.1 million was royalty revenue. For the first six months of 2021, total revenue was $151.6 million, of which $94.7 million was net product revenue, $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 $6.6 million was royalty revenue. This compares to total revenue for the first six months of 2020 of $121.8 million, of which $97.4 million was net product revenue, $22.7 million was license revenue received from Puma’s sub-licensees, and $1.7 million was royalty revenue.

Operating Costs and Expenses

Total operating costs and expenses were $70.0 million for the second quarter of 2021, compared to $63.5 million for the second quarter of 2020. Operating costs and expenses for the first six months of 2021 were $148.1 million, compared to $128.9 million for the first six months of 2020.

Cost of Sales

Cost of sales was $12.0 million for the second quarter of 2021, compared to $9.4 million for the second quarter of 2020. Cost of sales was $41.5 million for the first six months of 2021, of which $20.0 million was for a termination fee paid to a former sub-licensee for the return of commercial rights to NERLYNX in Greater China, compared to cost of sales of $18.5 million for the first six months of 2020.

Selling, General and Administrative Expenses

Selling, general and administrative (SG&A) expenses were $39.4 million for the second quarter of 2021, compared to $29.4 million for the second quarter of 2020. SG&A expenses for the first six months of 2021 were $67.7 million, compared to $60.3 million for the first six months of 2020.

The $7.4 million year-over-year increase for the first six months resulted primarily from an increase in stock-based compensation of approximately $10.9 million, partially offset by decreases in payroll and related costs of approximately $0.8 million, professional fees and expenses of approximately $0.6 million, travel and meetings costs of approximately $0.9 million, and other expenses of approximately $1.2 million.

The $10.9 million increase in stock-based compensation expense consisted of a $13.6 million incremental expense resulting from a modification to the term of Mr. Auerbach’s warrant and an increase of $2.6 million from new grants, partially offset by decreases of approximately $4.2 million for stock awards that have fully vested and $1.1 million from stock awards forfeited.

Research and Development Expenses

Research and development (R&D) expenses were $18.6 million for the second quarter of 2021, compared to $24.7 million for the second quarter of 2020. R&D expenses for the first six months of 2021 were $38.9 million, compared to $50.1 million for the first six months of 2020.

The $11.2 million year-over-year decrease for the first six months resulted primarily from decreases in stock-based compensation expense of approximately $6.3 million, clinical trial expenses of approximately $2.8 million, internal R&D expenses of approximately $1.6 million and consultant and contractors’ costs of approximately $0.5 million.

Total Other Income (Expenses)

Total other income was $11.5 million for the second quarter of 2021 compared to $3.7 million of total other expenses for the second quarter of 2020. Total other income was $7.9 million for the first six months of 2021 compared to total other expenses of $6.4 million for the first six months of 2020. The $14.3 million year-over-year increase for the first six months resulted primarily from a net reduction in accrued legal verdict expense of approximately $14.9 million, partially offset by a decrease in interest income of approximately $0.4 million and other immaterial fluctuations.

Conference Call

Puma Biotechnology will host a conference call to report its second quarter 2021 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, August 5, 2021. 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.