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Puma (PBYI) Q3 Earnings Beat, Nerlynx Sales Weak, Stock Down

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Puma Biotechnology, Inc. (PBYI - Free Report) incurred a loss of 44 cents per share in the third quarter of 2019, which was narrower than the Zacks Consensus Estimate of a loss of 76 cents.

The loss per share includes an impact of stock-based compensation expense. Excluding such impact, adjusted net loss per share was 12 cents per share versus earnings of 16 cents in the year-ago quarter.

Total revenues consisted of net product revenues from the sales of Nerlynx, Puma Biotech's only marketed drug, and license and royalty revenues. In the third quarter of 2019, total revenues were $56.4 million, comprising $53.5 million of product revenues from Nerlynx, $0.1 million of royalty revenues from licensing partners and license revenues of $2.8 million. However, sales missed the Zacks Consensus Estimate of $61.0 million and were also lower than the year-ago figure of $62.6 million.

Nerlynx (neratinib) is indicated for extended adjuvant treatment of HER2-positive early stage breast cancer in patients, previously treated with Roche’s (RHHBY - Free Report) Herceptin-based adjuvant therapy.

Sales of Nerlynx rose a mere 1.7% year over year and declined 0.6% on a sequential basis. A higher number of patients discontinuing treatment with Nerlynx resulted in a sequential decline in Nerlynx’s sales in the third quarter. Nerlynx’s bottle volumes declined 2% sequentially in the quarter. However, new prescriptions grew 4% sequentially in the quarter.

Total operating costs in the quarter were $70.8 million, down 4.2% year over year. Research and development expenses (including for stock-based compensation expense) were $30.0 million in the quarter, down 17.6% from the year-ago period. Selling, general and administrative expenses (including for stock-based compensation expense) rose 10.2% year over year to $31.4 million.

Guidance

For 2019, Puma expects Nerlynx sales to be in the range of $205 million to $210 million, lower than the prior expectation of $220 million to $240 million. Meanwhile, licensing and royalty revenues from its licensing partners are still expected in the range of $56 million to $60 million in 2019.

The sequential decline in Nerlynx’s sales and the cut in full-year sales guidance resulted in the stock declining almost 18% in after-hours trading on Wednesday. The stock has declined 65% this year so far against the industry’s increase of 0.9%.

 

 

Pipeline & Other Update

In the quarter, Puma’s licensing partners announced regulatory approvals for Nerlynx in Canada and Argentina. Earlier this week, its licensing partner in Greater China, CANbridge, received marketing approval in Hong Kong. Puma will be entitled to royalties from the sales of Nerlynx in those territories once it is commercialized.

Several studies on Nerlynx targeting different types of breast cancer patient populations and in earlier-line settings are currently underway. In July 2019, Puma Biotech submitted a supplemental new drug application (sNDA) to the FDA for the approval of Nerlynx to treat third-line HER2-positive metastatic breast cancer. The sNDA was based on data from the phase III NALA study, which assessed the combination of Nerlynx + Xeloda compared to Xeloda plus Novartis’ (NVS - Free Report) Tykerb (lapatinib) for treating patients with HER2-positive metastatic breast cancer, who have failed two or more prior lines of treatments. In September 2019, the FDA accepted the sNDA for review and set an action date of April 2020.

If the company gets an approval to include the NALA study outcome on Nerlynx’s label, it will be eligible to treat a broader breast cancer population, which can drive sales higher.

In September, the FDA granted Orphan Drug Designation to neratinib for the treatment of breast cancer patients with brain metastasis.

Apart from the HER2-positive breast cancer indication, Nerlynx is being evaluated for several other cancers as well, including NSCLC and other tumor types that over-express or have a mutation in HER2.

A key analysis on Nerlynx is the phase II SUMMIT basket study in HER2-mutated cancers. In the third quarter, Puma met with the FDA in the third quarter to discuss the development and regulatory strategy for this study. Puma announced on the conference call that based on this FDA meeting, it is modifying the SUMMIT study to expand the HER2 mutation breast cancer cohorts. It said it will hold a pre-NDA meeting with the FDA for both the HER2 mutated breast cancer and HER2 mutated cervical cancer indications in approximately 12 to 18 months. This will likely delay data from the SUMMIT study, which might have also resulted in the stock price decline on Wednesday.

Zacks Rank & Stocks to Consider

Puma Biotech currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the biotech sector is Vertex Pharmaceuticals (VRTX - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Puma Biotechnology, Inc. Price, Consensus and EPS Surprise

 

Puma Biotechnology, Inc. Price, Consensus and EPS Surprise

Puma Biotechnology, Inc. price-consensus-eps-surprise-chart | Puma Biotechnology, Inc. Quote

Vertex’s earnings per share estimates have moved up by 5% for 2019 and 9.8% for 2020 over the past 30 days. Share price of the company has increased 18.3% this year so far.

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