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Puma Biotech (PBYI) Down More Than 40% in 90 Days: Here's Why

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Shares of Puma Biotechnology, Inc. (PBYI - Free Report) have witnessed a sharp decline in the past three months. In fact, the biotech company’s stock has plunged 41.5%, wider than the industry’s decline of 4.6%.

The company’s sole marketed drug, Nerlynx (neratinib), was launched in the United States in July 2017 for treating early stage HER2-positive breast cancer in patients, previously treated with Roche’s (RHHBY - Free Report) Herceptin-based adjuvant therapy. Last September, the European regulatory body gave a marketing approval to Nerlynx for the same indication.

In the first nine months of 2018, Nerlynx generated sales of $139.4 million. However, the metric fell below management expectations in third-quarter 2018 due to higher patient discontinuation.

On third-quarter conference call, the company stated that the percentage of patients, who stopped taking Nerlynx due to adverse events, has risen significantly since the second quarter of 2018. This hurt investors’ sentiments and induced a considerable stock price decline over the given time period. Estimates are low for the improvement of Nerlynx sales ahead of the Q4 earnings results. Puma Biotech is expected to report fourth-quarter 2018 and full-year earnings figures in March.

Puma Biotech plans to commercialize Nerlynx in Europe during 2019, starting with a launch in Germany during the first half of this year, followed by other European countries in the second.

Apart from the HER2-positive breast cancer indication, Puma Biotech believes that Nerlynx holds great potential for treating multiple cancers including NSCLC and other tumor types, which over-express or have a mutation in HER2. Several additional assessments on Nerlynx targeting different types of breast cancer patient population and in earlier-line settings are currently underway.

Last month, Puma Biotech announced top-line results from the phase III NALA study, evaluating Nerlynx for the treatment of third-line hormone receptor-positive (HER2-positive) metastatic breast cancer.

The NALA program probed a combination of Nerlynx with Roche’s Xeloda (capecitabine) as compared to Novartis' (NVS - Free Report) Tykerb (lapatinib) plus Xeloda in patients with HER2-positive metastatic breast cancer, who have failed two or more prior lines of HER2-directed therapies.

Findings from the study showed that patients, who received Nerlynx + Xeloda, experienced a statistically significant improvement in centrally confirmed progression free survival (PFS) compared with those administered with Tykerb + Xeloda. However, the combo regime of Nerlynx + Xeloda led to an improved overall survival (OS) rate but was unable achieve a statistical significance. This hit the stock price further.

If Puma Biotech gets an approval to include the NALA study outcome on Nerlynx’s label, it will be eligible to address a broader breast cancer population.

The company has no approved product in its portfolio other than Nerlynx at this moment. Hence, due to the lack of a strong pipeline, the company is totally dependent on Nerlynx for growth. As a result, any kind of development or a regulatory setback could affect the company’s growth prospects as well as the stock price substantially.

Although the HER2-positive breast cancer market has immense commercial potential, it is still evident that Nerlynx will face intense competition from various approved drugs for the same indication. Such medicines include Roche’s Perjeta and Kadcyla, Glaxo’s Tykerb, Lilly’s (LLY - Free Report) Verzenio and Novartis' Kisqali. Additionally, quite a few companies are working to introduce treatments to the market targeting this disease.

Zacks Rank

Puma Biotech currently carries a Zacks Rank #3 (Hold).You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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