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Puma Biotech (PBYI) Q1 Loss Narrows, Sales Miss, Stock Down

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Puma Biotechnology, Inc. (PBYI - Free Report) reported a loss of 65 cents for the first-quarter of 2018, narrower than the Zacks Consensus Estimate of a loss of 75 cents and the year-ago loss of $1.97.

However, the net loss included stock-based compensation (SBC) expense, which represented a significant portion of overall expense. Excluding, SBC, earnings were 3 cents per share versus a loss of $1.16 in the year-ago quarter.

Total revenues were $66.5 million consisting of $36 million from the sales of its only marketed product, Nerlynx (neratinib) and license revenues of $30.5 million. Sales missed the Zacks Consensus Estimate of $69.0 million.

Shares of Puma declined 2% on Wednesday in after-hours trading following the earnings release. Puma’s shares have underperformed the industry this year so far. While the industry has declined 12.3%, Puma’s shares have gone down 33.9%.

 

Quarter in Detail

Nerlynx (neratinib) was launched in the United States last August for the treatment of early stage HER2-positive breast cancer in patients, who have been previously treated with Roche’s (RHHBY - Free Report) Herceptin-based adjuvant therapy. Nerlynx sales of $36 million in the first quarter represented a sequential increase of 79% from $20.1 million recorded in the previous quarter.

On the conference call, the company mentioned that the specialty pharmacy channel, which provides Nerlynx directly to patients, received over 2400 new patient prescriptions since the FDA approval last July through Apr 30. The number of prescribers for Nerlynx grew over 50% in the last quarter.

The drug is also under review in the EU for the same indication. However, in February, the company announced that the Committee for Medicinal Products for Human Use (CHMP) adopted a negative opinion, recommending the refusal of the Marketing Authorization Application for Nerlynx in the EU. In March, Puma requested a re-examination of that opinion and expects a reassessment of the CHMP opinion by late June/early July.

Total operating costs in the first quarter were $89.9 million, up almost 23% year over year.

Research and development (R&D) expenses were $46.9 million, down 14.4% from the year-ago period due to lower clinical study costs and stock-based compensation expenses. Selling, general and administrative expenses almost doubled year over year to $36.6 million on higher costs to support the commercialization of Nerlynx.

Puma expects its R&D costs to decrease in subsequent quarters as clinical studies wind down.

Additional Studies on Nerlynx

Several additional studies on neratinib targeting different types of breast cancer patient populations and in earlier-line settings are underway. Also, several phase II combination trials evaluating Nerlynx for the treatment of breast cancer are on.

Notably, Puma expects to present data from the phase III NALA study in third-line metastatic breast cancer in the second half of 2018, delayed from the previous expectation of the first half. Also, the company expects to report updated phase I/II data from the ongoing study of neratinib in combination with Kadcyla, in HER2-positive metastatic breast cancer in the second quarter at the annual meeting of American Society of Clinical Oncology.

Apart from the HER2-positive breast cancer indication, the company believes that neratinib holds potential for treating several other cancers including NSCLC and other tumor types that over-express or have a mutation in HER2.

Other Update

In April, Puma entered into an agreement with Pint Pharma International to commercialize Nerlynx (neratinib) in Argentina, Brazil, Chile, Colombia, Mexico and the rest of Latin America.

Other than Pint Pharma, Puma has marketing agreements with many other international companies to make Nerlynx accessible to patients globally. These include CANbridge in mainland China and Taiwan, Medison Pharma in Israel, and Specialised Therapeutics Asia in South East Asia.

Also, in the quarter, National Comprehensive Cancer Network (NCCN) guidelines were updated to include Nerlynx as a recommended combination treatment option for breast cancer patients with brain metastases. Most physicians use the NCCN guidelines to determine the best course of treatment for their cancer patients.

2018 Guidance

For 2018, Puma continues to anticipate Nerlynx sales in the range of $175 million to $200 million.

Puma Biotechnology, Inc. Price, Consensus and EPS Surprise

 

Puma Biotechnology, Inc. Price, Consensus and EPS Surprise | Puma Biotechnology, Inc. Quote

Zacks Rank & Stocks to Consider

Puma currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the biotech sector are Ligand Pharmaceuticals (LGND - Free Report) and Protagonist Therapeutics (PTGX - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ligand’s 2018 earnings per share estimates increased 5.5% in the last 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with an average beat of 31.79%. The company’s shares have rallied 23.4% year to date.

Protagonist Therapeutics’ loss estimates narrowed 49% for 2018 and 37% for 2019 over the last 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with an average beat of 24.95%.

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