Q3 2020 Puma Biotechnology Inc Earnings Call

Greetings, ladies and gentlemen.

Thank you for joining the Puma biotechnology third quarter earnings call at.

At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.

Please note that this conference is being recorded.

I'll now turn the conference over to your host Marianne well had.

Senior director. Thank you you may begin.

Thank you Diego good afternoon, and welcome to this conference call to discuss our financial results for the third quarter 2020, joining.

Joining me on the call today are Alan.

Chief Executive Officer, President and Chairman of the board of Biotechnology maximal new guests Chief Financial Officer, and Jeff Mcrae, Chief Commercial officer.

After market close today, we issued a news release detailing third quarter 2020 financially so.

Yeah actually the slides that Alan and Jeff will be for two and a webcast of this call are acceptable.

H and investor sections of our website at Puma Biotechnology Dot com.

The webcast and presentation slides will be archived on our website and available for replay for the next 90 days.

Today's conference call will include statements about the company's future expectations plans and prospects that constitute forward looking statements for purposes of federal Securities laws.

Such statements are subject to risks and uncertainties and actual results may differ from those expressed in these forward looking statements due to a number of factors which include the risk factors disclosed in the periodic and current reports filed by tomorrow with the FTC from time to time.

You are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date of this last conference call November 2020.

The company undertakes no obligation to revise or update any forward looking statements to reflect you dance you circumstances that date of this conference call, except as required by law.

During today's call. We may also refer to certain non-GAAP financial measures that involve adjustments to our GAAP figures.

We believe these non-GAAP metrics may be useful to investors as a supplement to but not as a substitute for our GAAP financial measure.

Please refer to our third quarter 2020 news release for a reconciliation of our GAAP to non-GAAP results.

I will now turn the call over to Alan.

Thank you Maria and thank you all for joining our call today.

Today, we reported total revenue for the third quarter of 2020, Oh 50.8 million total.

Total revenue includes net U.S. airlink sales as well as licensing and royalty fees from our sub licensees.

There are links sales were 49.3 million in the third quarter of 2020, representing a slight increase from the 48.8 million and net sales reported in the second quarter of 2020, and a decrease of 53.5 million reported in Q3 EPS 2093.

During the third quarter of 2020, we continue to experience challenges well.

And this patient population.

As investors are also aware Houma has an ongoing basket trial of Iraq and her two mutated cancers referred to as the summit trial. The Soma trial was modified in early 2020, such that ER positive kerchoo negative breast cancer patients who have heard two mutation were randomized.

To receive other fulvous drink alone Fulton Street, plus trastuzumab or the combination of <unk> plus four vestron plus trastuzumab.

Under the initial assignments to stage design each arm on the amended study will enroll seven patients during stage, one and if no patient in a given arm respond that arms closed for further enrollment if in the first stage of one or more patients respond. The arm will then be expanded up to 18 patients.

Lesson for patients in the expanded on respond that arm will be close to further enrollment if more than four patients respond. The arm is expanded an additional patients are enrolled.

As we reported on our second quarter earnings tall enrollment into the summit trial and Q2 of 2020 was negatively impacted by the COVID-19 pandemic enrollment did increase slightly in the third quarter and continue to continue to increase in the month of October.

Swimming. This trend continues we anticipate that enrollment into the initial stages assignment to stage.

For the HR positive breast cancer cohorts.

Of the trial will occur in the first half of 2020. However, we recognize that this could continue to be impacted by COVID-19, and also recognized the potential uncertainty associated with any additional wave of COVID-19 should one occur later this year or early next year.

Once we received the initial results from the sign in two stage in the HR positive breast cancer cohorts, we plan to schedule, a <unk> meeting with the FDA to discuss the potential for accelerated approval.

We also anticipate them in the first quarter of 2021.

We will be reporting phase two data from the cohort on the cemetery aisle in which patients would filed up cancer with her two mutations were treated with the rat that monotherapy.

In addition, the summit trial was most recently amended to include a new cohort of patients to be treated.

This chord included patients with non small cell lung cancer with Egfr Exxon 18, mutations who were treated with the rat in the amount of therapy. We are today presenting the preliminary efficacy data from this cohort of patients.

As you can see on the slide EGF excellent 18 mutations are rare mutations of lung cancer Exxon 18 mutations comprise approximately 5% of the Egfr mutations detected at a lung cancer.

The preclinical data has demonstrated that Egfr Exxon muted 18 mutations appear to be sensitive to interact with.

The data on this slide shows the preclinical efficacy of several Egfr directed terracing kinase inhibitors or TK eyes against Egfr excellent 18 mutations as you can see from the in vitro data on the slide Ratton appears to have the strongest preclinical potency against Egfr excellent 18 mutations compared to the.

[noise] Egfr directed TKS tested.

The rapid was previously tested and a phase two clinical trial at a lung cancer. This trial was published in 2010 in the journal of clinical oncology.

In that trial, there were four patients with Exxon 18, mutations and lung cancer, who enrolled in the trial all of which had the G 719 X mutation.

Of the four patients with excellent and 18 mutations three experienced a partial response with a median PFS 52 seven weeks.

Based on this data we amended the summer trial to open a new cohort for patients with excellent 18 mutated.

Non small cell lung cancer.

These patients were treated within the ratner bundle therapy the.

The study was designed as assignments to stage trial, where we initially enrolled seven patients during stage one and it's no patient responded we would close the arm for further enrollments if in the first stage one or more patients responded the cohort was expanded up to 18 patients if less than four four patients in the expanded arm respond.

They are able to close to further enrollment if more than four patients respond the arm would be expanded an additional patients would be enrolled.

To date, there have been 11 patients enrolled in this cohort.

These patients received a median of two prior treatments and the metastatic setting including treatment with chemotherapy and checkpoint inhibitors. Importantly, there were 10 patients in the trial, who received prior treatment with an egfr directed tyrosine kinase inhibitor, which included reversible TK is like.

Fitment and her last name as well as irreversible inhibitors like <unk> and effect.

The preliminary efficacy data from the trial demonstrates that for the 10 patients who received prior Egfr TKS treatment six patients from 60% showed a partial response as best overall response with four of these responses are 40% being can.

Firmed partial responses.

The median duration of these responses was seven five months in this cohort of 10 patients who received prior Egfr TKS treatments that clinical benefit rate was 80% and the median PFS was nine one months.

As you can see on this slide you can see the waterfall plot on the right and the four o'clock on the left.

As you can see from the plots than a number of the.

Patients had either single or complex Egfr excellent 80 mutations and responses, we're seeing in both groups of patients of the 10 patients who had received prior Egfr TKS treatments. All of these patients had the G 719, and excuse me the G 719 expectation which was present.

Either as a single mutation or as a complex mutation in combination with either E. Seven O nine X F 768, I and <unk> 790 M.

As of the August data cutoff, there are still four patients being treated with the ratliff monotherapy.

The safety data from the trial demonstrated that for the 11th patients in the trial of the most common adverse event with diarrhea. There were no cases of grade three or higher diarrhea, and there were five patients or 45, 5% of the patients experiencing any grade diarrhea.

Looking at this diarrhea data closer.

Of the five patients who experienced diarrhea, one patient had grade two diarrhea and for patients had grade one diarrhea.

No patient required a dose hold or dose reduction or permanently discontinued there at noon due to diarrhea.

Other her two amplified tumors and EGI, if our mutated glioblastoma.

I will now turn the call over to Jeff Ludwig prove as Chief commercial officer for a view of our commercial performance during the quarter.

Thanks, Alan I appreciate it and thanks to everyone for joining this call. This is the second earnings call that I've had the privilege of representing Koumas commercial organization and I can tell you that the team is working very hard to reposition the brand tighten up our focus in execution and deploying resources in a very smart and efficient manner.

I am proud of the progress that the team is making but all of us realized that more must be done to help patients and their families battling breast cancer.

Before I move into the commercial review just to remind you that I will be making forward looking statements.

As you May recall, we have two channels that provide near links to patients. We refer to these as our specialty pharmacy channel and our specialty distributor channel or in office dispensing channel.

The majority of our business flows through the specialty pharmacy channel.

More specifically in Q3, approximately 77% of our business went through this channel with the remaining 23% flowing through the specialty distributor channel. This is in line with what we reported during our Q2 earnings call as well.

Now later in this call maximal will review the full financial results, but I will now provide you with the current use sales results.

We continue to operate in a very unique environment with the COVID-19 pandemic still impacting the majority of the country with no no clear end in sight as of yet to.

The commercial team has worked very hard to adapt to this new reality, but our overall promotional activities continued to be impacted in Q3.

As expected live face to face interactions with healthcare providers were very limited with virtual engagements, becoming the norm.

But our net overall promotional interactions combining both live and virtual were down from our pre coke at baseline.

As we reported during our Q2 earnings call. We did see a decline in the number of new patient signing up to a specialty pharmacy channel in may with some recovery in June which we believe was related to the ebb and flow of the stay at home orders and the corn teams that were in place in various parts of the country.

The volatility of COVID-19 continued throughout Q3 with some softening in both the specialty pharmacy channel as well as within the specialty distributor channel.

Slide four shows us quarterly net sales of narrowing since FDA approval.

As Alan noted our net us product sales were $49.3 million in the third quarter 2020. This is a slight increase over the $48.8 million, we reported in Q2 of 2020.

Slide five shows the bottles of nibbling sold by quarter since launch we sold 3611 bottles of Newlinks in Q3 of 2020, which is a decrease of about 3% from our Q2 2020 bottle sales of 3728.

As mentioned previously we believe that the COVID-19 pandemic and its impact on our promotional access played a role in the softness.

With that said the team is focused and committed to changing these trends.

Alan highlighted in his opening remarks, two key publications that recently occurred.

The first one was the publication of the interim results of the control study published in the September addition of Annals of oncology. This is important because it highlights at anti real strategies can significantly reduce the incidence of grade three diarrhea, and improve overall tolerability of Newlinks.

The second publication included the final efficacy results from the EPS than that trial, which was recently published in clinical breast cancer in early October.

This is important because among other things it highlighted the benefits seen in an exploratory analysis of patients at heightened risk of disease recurrence. These patients were her two positive HR positive with residual disease, receiving their links within one year following their transduce them try Susan map based therapy excuse me.

This exploratory analysis demonstrated a consistent benefit in invasive disease free survival overall survival and CNS events.

Okay farmer received approval in Ecuador in Q3.

Pier Farve is planning a queue for launch in Finland, and finally fixing filed their NBA in South Korea in October.

During the remainder of 2020 and beyond we look forward to the potential for neural links to be approved an additional countries in Europe, Latin America Asia, Southeast Asia, and the Middle East.

In summary, I am proud of the work that is being done by the team and believe that we are well positioned to increase the impact and we are having a patient's battling her two positive breast cancer.

I will now turn the call over to maximum for a review of our financial results Maxwell for yours.

Thanks, Jeff.

I will begin with a brief summary of our financial results for the third quarter of 2020.

Auto sales for the third quarter was 10 million, which included amortization of milestone payments to the license or open their happiness of approximately 2 million.

Going forward, we will continue to recognize the monetization of the milestone payments to the licensor were about 2 million per quarter as cost of sales.

For full year 2020, Houma anticipates, the Nellix net sales will be in the range of 196 to 198 million.

This this is slightly lower than our prior guidance of 200 to 210 million.

Research and development expenses were $23.3 million in the third quarter compared to 24.7 million and 25.5 million for Q to Q1 2020, respectively.

R&D expenses include a non cash charges for stock based compensation of $3.5 million in Q3 compared to $5.9 million on 4.2 million for Q2, and Q1 2020, respectively.

We have received additional data from the claims administration related to our class action lawsuit.

Clans report asserted damages of approximately 50.5 million.

Which is the largest which is larger than the amount paid previously estimated.

We intend to challenge some of these claims and estimate that the damages could be as low as 24.8 million.

We increased our accrual legal reserve by $15.7 million, which impacted other income and expense.

In the third quarter of 2022, my reported cash of 1.8 million compared to cash of 6.2 million in Q2, 2020, and cash burn of 11.6 million in Q1 2020.

We ended the third quarter of 22, any with 109 million in cash cash equivalents and marketable securities.

Our account receivables balance at September Thirtyth was 27.1 million.

Our accounts receivable turns range between 10, and 60 days or.

While our day sales outstanding are about 45 days.

We estimate that as of September Thirtyth 2020, our distribution network maintains approximately three weeks of inventory.

Overall, we continue to deploy our financial resources to focus on the advancement of Neratinib long going clinical trials and the commercialization of Nellix.

Thanks Mac low.

We continue to recognize that we need to improve and airlink sales growth and that the COVID-19 pandemic is presenting challenges to us with respect to achieving that growth.

From a senior management in cooperation with the commercial committee of the Board of Directors continues to remain focused on nearly its revenue and sales growth in 2020 and beyond.

We are continuing to adapt to the virtual commercial environment that we have needed to pivot towards due to the COVID-19 pandemic and we are hopeful that changes to our commercial infrastructure, we'll make a positive contribution to nearly sales grew up with.

We look forward to updating investors on this in the future.

Hello, <unk> convenient if you look at the clinical trials Dot Gov, I think we've got somewhere in the neighborhood ballpark to 45 to 55 sites and this study. These 11 patients were probably enrolled less than 10 of them. So since we've got the data we're going out to the other sites and making them aware of this data because obviously.

Knowing that it's active you're going to be more interested in enrolling patients and that is definitely helped with the enrollment in the study. So you've got a number of lung cancer specific conferences. During the first half of next year like in Q1, and then <unk> as well. So we'll continue to present updates to that during that time, So I would I would envision.

Both Q1, and Q2, you could see updates to this data and that should be.

Certainly north of the 11 patients.

Chuck positive breast cohorts, assuming we complete enrollment in the first half of 2021 in which that cohort has been picking up very nicely in terms of enrollment.

I would imagine in that ballpark first half 21 would be when we will be having the pre NDA meeting.

That's what I was talking about sorry about that.

Hi, Rob.

Uh huh.

So you could just talk about you know sales in Europe and in royalties there.

You know we.

Lineup of new countries that are launching in 2021, so I'm I'm optimistic on them in terms of their execution, but I'm also optimistic on their growth in the new countries as well as the existing.

Thanks Alan.

Perhaps the last question from me is just on.

SGN a expenses so with the.

Continued efficiencies in the EPS Junior SNA line going forward for sure and that I would also just add to that one of the big costs, you would get from the Salesforce, obviously as travel right because you.

You're going to have a salesforce is going to have a territory that might span over three states or something so that would be driving and flying in et cetera, clearly with a reduction in the number of input.

In person visits that you can do that travel expenses, a lot lower and I I.

I would love to be able to tell you that I think things are all of a sudden going to turn around and we're going to be able to start doing more.

In person meetings live I, just don't think thats going to happen for a long period of time, so I would imagine because of that you.

You are likely to see the SG and eight levels continue to be low and not see a huge.

Uptick in travel related expenses.

Great. Thanks for taking my questions.

Last year.

We discussed with them both the breast trial, the breast cohort and the cervical cohorts and they didnt ask us to run a new trial. They just asked us to kind of continue enrolling the existing trial.

Patient starts trended in two three verses two wanting thank you too or trends in new to brand or a new prescriptions. Obviously saw the analysis of bottles sold in the percent of new patient starts at the mower does but just wondering again, how new prescriptions trended versus retail.

Thanks, so much.

<unk>.

[noise], yeah, Thanks, Ken and you know <unk>.

<unk> starts trended down in Q3, obviously it was impacted by the pandemic. We obviously saw this in our in office distributing as well as we were certainly hearing less patience, we're coming through the in office.

Our expectation for Q4 is somewhere around between 17% and 18%.

Quarter over quarter.

So in that population that are appears to be a.

10.5% response rate. So we're right now at a 40% response rate, which is very encouraging obviously as we get more data, we'll see where that goes it could stay the same it could go down or could go up we just have to wait and see but.

But if we continue to maintain.

The same type of effect, where we're seeing you know.

Large magnitude of difference from a fat demand response rate and you know we're continuing to see an encouraging duration of response and PFS I would feel very comfortable having having that conversation with the FDA.