Q2 2022 Puma Biotechnology Inc Earnings Call

Good afternoon, My name is Alex and I will be your conference call operator today.

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I would now like to turn the conference call over to Marianne O Hannesson senior director of IR for Puma Biotechnology, you may begin your conference.

Thank you Alex Good afternoon, and welcome to Puma's conference call to discuss our financial results for the second quarter of 2022.

Joining me on the call today are Alan Auerbach, Chief Executive Officer, President and Chairman of the board of Puma Biotechnology next ammonia against Chief Financial Officer, and Jeff Ludwig Chief Commercial Officer.

After market close today Puma issued a news release detailing second quarter 2022 financial results.

News release, the slides that Jeff will refer to and a webcast of this call are accessible via the homepage and investor sections of our website at Puma Biotechnology Dot com.

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.

Statements are subject to risks and uncertainties and actual events and results may differ from those expressed in these forward looking statements.

A full discussion of these risks and uncertainties. Please review our periodic and current reports filed with the Securities and Exchange Commission from time to time, including our annual report on Form 10-K for the year ended 12, 31, 21, and our quarterly report on Form 10-Q for the period ended June 32000.

'twenty two.

You are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date of this live conference call August four 2022.

The company undertakes no obligation to revise or update any forward looking statements to reflect the hands or circumstances. After the date of this conference call.

As required by law.

During today's call with me also referred 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 measures.

Please refer to our second quarter 2022 news release for a reconciliation of our GAAP to non-GAAP results.

I'll now turn the call over to Alan.

Yeah.

Thank you Mary Anne.

Thank you all for joining our call today.

Today Puma reported total revenue for the second quarter of 2020 to $59 5 million.

Total revenue includes product revenue net which consists entirely of narrowing sales as well as license fees and royalties from our sublicense fees.

Product revenue net of $51 3 million in the second quarter of 2022, which represents an increase as expected.

From the $40 7 million in product revenue.

Net reported in the first quarter of 2022, and $48 9 million in product revenue net reported in Q2 2021.

Product revenue for the second quarter of 2022 included approximately $2 $7 million of inventory build at our specialty pharmacy and specialty distributors royalty revenue was $8 2 million in the second quarter of 2022, an increase from $5 million in Q1 2022.

$4 3 million in Q2 2021, we recorded no license revenue in the latest quarter.

We reported 3200 bottles of <unk> sold in the second quarter of 2022, an increase of 520 from 2000 and 680 bottles sold in Q1 2022, we estimate that the Q2 inventory build amounted to approximately 175 bottles.

As noted on our last quarter call, we estimate the inventory stocking in late 2021 cost a reduction of approximately 282 bottles in Q1 2022.

In Q2, 2022, new prescriptions of <unk> were down approximately 8% compared to Q1, while total prescriptions Trs we're up about one 6%.

Jeff will provide further details in his comments and slides.

I will now provide a clinical review of the quarter and then Jeff Ludwig will add additional color on <unk> commercial activities Maximo <unk> will follow with highlights of the key components of our financial statements for the second quarter of 2022.

As we have mentioned on our prior calls.

<unk> has an ongoing basket trial of Niraparib and hurts <unk> mutated cancers referred to as the summit trial.

Amit trial that has enrolled the most patients to date is the arm that is testing <unk> in patients with pulmonary receptor positive <unk> negative breast cancer, who have a hurts your mutation and as we have discussed on previous investor calls.

<unk> has been looking to pursue a regulatory approval in this indication and more specifically for the triplet.

<unk> plus Trastuzumab plus logos route.

For which clinical data was presented at the recent American Society of clinical oncology annual meeting in June .

As investors are aware at the American Society of clinical oncology meeting in June .

Data was presented on the hurts you targeted antibody drug conjugate and hurt you in patients with her two negative HR positive metastatic breast cancer in a trial referred to as destiny breast or <unk> or <unk> four.

This trial showed an improvement in progression free survival and overall survival and assuming that it is approved we believe it is likely to become the new standard of care for patients with her two negative metastatic breast cancer.

Based on the inclusion criteria for <unk> four.

We believe that it is likely that the population of patients studied in DVA for overlaps with that of summit for Neurotomy in HR positive <unk> negative.

<unk> mutated breast cancer.

While we did not know what percent of the patients in <unk> had hurts your mutations we acknowledge that in her two is a hurt you targeted agent and has shown activity in and it is in the NCC and guidelines for other her two mutated tumors.

Due to this we believe that it is unlikely that the FDA would grant accelerated approval for <unk> based on the summit data Edward instead require us to either one do a head to head trial against in her two in this indication.

To do a trial of the triplet in combination within her two versus in her two mono therapy or three studied <unk> in a hurts you mutated population that does not overlap with the <unk> indication.

We believe that the head to head trial against in her two is not in the best interest of shareholders as the cost of this trial would be prohibited in the likelihood of success would be low.

The trial of the triplet combination with it hurts you versus and hurts your monotherapy would require a new trial of the safety of the trip within her too and it's further complicated by the fact that it hurt you is trastuzumab based which would complicate, giving the triplet which includes trastuzumab with and hurt you.

A third option of studying around it in a different indication would require us to redo the randomized three arm study, which tested <unk> plus trastuzumab plus full investment versus Trastuzumab, plus full restaurant versus <unk> alone.

In a new population.

Such as an earlier stage group of patients who are <unk> naive or later group of patients who are already in the fee received it hurt you.

Due to the rarity of the Hershey mutation in breast cancer and the time it would take to enroll this three arm randomized trial and the subsequent Simon's two stage expansions. It is not clear that this can be accomplished in a timeframe that would result in a positive return for Puma shareholders.

<unk> plans to submit the final data from summit to the FDA later this year to confirm our thoughts on this indication with the FDA and obtain their guidance from what we will continue to update investors on the status of this as it progresses.

As investors are also aware in November 2020, we announced interim data from another cohort of the summit trial and more specifically in a cohort of patients with metastatic non small cell lung cancer with epidermal growth factor.

Exon 18 mutations.

Who have been previously treated with an egfr targeted tyrosine kinase inhibitor.

As was shown in the data that was presented there were four responders out of 11 patients and therefore the criteria had been met to proceed to stage two of assignments two stage design and to enroll 30 patients.

There are currently 31 patients enrolled in this arm of the trial and we anticipate that we will have additional data from this cohort to report in the second half of 2020 Q.

Once we receive the data we plan to meet with the FDA to discuss the regulatory pathway for this indication.

<unk> anticipates that the SBA will either allow the company to file for accelerated approval based on single arm data or may require additional data or a separate randomized trial for this indication. If a randomized trial is required the company will make a decision whether or not to proceed based on the time and cost of the trial versus the <unk>.

<unk> market opportunity enrolment for this arm of the trial has been halted while we analyze the current data and wafer regulatory guidance.

As mentioned on prior earnings calls and in response to Investor questions improvement is also evaluating several drugs to potentially in license that would allow the company to diversify itself and leverage <unk> existing R&D regulatory and commercial infrastructure promo will continue to update investors on the status of this as it progresses.

I will now turn the call over to Jeff Ludwig <unk>, Chief Commercial officer for a review of our commercial performance during the quarter.

Thanks, Alan I appreciate it and thanks to everyone for joining our second quarter earnings call.

Before I move into the commercial review just a reminder, that I will be making forward looking statements.

I continue to be inspired by the stories of women battling breast cancer, but saddened by the overall impact of this disease I am hopeful given the progress being made but no. There is so much more than needs to be done.

We remain committed to helping women and their families battling breast cancer and believe that <unk> can play a more important role in both early stage disease as well as in metastatic disease.

Our overall commercial strategy has not changed we remain focused on three areas.

Number one leveraging and communicating the evolving positive clinical data for <unk>.

Number two engaging and educating patients about the risks and benefits of neuro links and three increasing our impact through field force execution and evolution I'm happy to say that progress was made on all three fronts in Q2 now.

Now, let me provide a little more color around this statement.

In Q2, we updated several of our promotional tools to better communicate the clinical benefits of <unk>.

We rolled out a new case based speaker deck, which has been very well received and continue to refine our personal and non personal promotion mix in.

In addition, our field teams further engaged with local and regional advocacy organizations to better support and educate patients throughout their breast cancer journey.

And lastly, we saw steady increases in HCP calls per day made throughout Q2, and our mix of live versus virtual interactions have continued to evolve.

In Q2, more specifically over 75% of our sales force interactions were alive versus virtual engagements.

Now the ebb and flow of Covid has been hard to predict but we are hopeful this trend will continue.

As I said upfront I have been inspired by the stories of women battling breast cancer, but saddened by the overall impact of this disease.

The extended adjuvant breast cancer market is significantly underpenetrated and we remain committed and focused on doing more to help support women's throughout their battle with breast cancer.

With that high level update let me transition to some of the U S. Commercial slides once I finish my remarks, I will turn the call over to Maximo for a more detailed review of our financial results.

Looking at slide three our distribution model has not changed we have two channels that provide <unk> 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 continues to flow through the specialty pharmacy channel in Q2, approximately 79% of our business went through this channel with the remaining 21% of the business flowing through the specialty distributor channel. This is slightly different but very similar similar to the 81% specialty pharmacy and 19% spec.

There'll be distributor mix.

That we reported in our Q1 earnings call.

Moving to slide four slide four shows us quarterly net sales of <unk> since FDA approval.

As Alan noted our net product sales were $51 3 million in the second quarter of 2022.

This is a $10 $6 million increase from the $40 7 million, we reported in Q1 of 2022.

This quarter over quarter increase is being driven by an estimated $4 3 million inventory drawdown that occurred in Q1 of 2022.

And an estimated $2 7 million inventory build that occurred in Q2 of 2022.

On slide five slide five shows the bottles of <unk> sold by quarter. Since launch. Please note that this slide shows ex factory bottles sold so it represents sales into our specialty pharmacy and specialty distributor channel and not end user demand.

We sold 3200 bottles of neuro links in Q2 of 2022, which is an increase of 520 bottles from our Q1 2022 bottle sales of 2680.

The majority of this increase was a direct result of the 282 bottle inventory drawdown that occurred in Q1 of 2022 and the subsequent 175 bottle inventory build that occurred in Q2 2022.

Now, let me provide some additional insight into the business.

New prescriptions and new patient starts are clearly an important leading indicator for our business. We follow these trends very closely new patient starts turned into refills, which influences subsequent quarters in terms of total bottles sold.

As highlighted in previous earnings calls, we tend to see a decline in new patient starts in the fourth quarter due to some patients deciding to delay starting <unk> therapy until after the Q4 holidays.

This decrease is Q4, new patient starts, but subsequently increases Q1, new patient starts now.

Now this pattern did play out as previously mentioned during our Q1 earnings call.

Claim. This forward this also impacts quarter over quarter comparisons in Q in Q2. Since you are comparing Q2 to an artificially high Q1.

In Q2, we saw an 8% decline in new patient starts as compared to Q1 now.

Now looking at year over year comparisons new patient starts in Q2 of 2022 were flat compared to Q2 of 2021.

This is the first time since launch we have not seen a negative Q2 year over year decline.

Transitioning to total prescriptions, we saw Q2 quarter over quarter increase of one 6% and a Q2 year over year decrease of six 3%.

The commercial team is focused on trying to drive consistent quarter over quarter growth and subsequent year over year growth.

Now with regards to free drug we continue to see an increase in the number of patients qualifying for free drug through our patient assistance program. This is being driven largely by an increase in Medicare patients who cannot cover the cost of their co pay and are unable to obtain financial assistance due to limited availability of co pay support from local regional or national.

<unk> foundations.

Moving to slide six as previously reported we were excited to have dose escalation added to our label in late June of last year for both our extended adjuvant indication as well as our metastatic indication.

In addition, we are pleased that MCC and updated their 2022 clinical practice guidelines for breast cancer to include dose escalation in early stage breast cancer.

As you can see on slide six we continue to see an increase in the adoption of dose escalation.

In Q2, approximately 65% of patients who receive commercial drug started <unk> on a lower daily dose.

Dose escalation can clearly benefit patients by significantly reducing reducing both the amount of grade three diarrhea, and the median days of grade three diarrhea, as well as reducing the overall discontinuation rate.

Now we are pleased with the adoption of dose escalation and are committed to seeing this adoption continues to grow.

Slide seven highlights the strategic collaborations we have formed across the globe with the goal of making <unk> available to more patients around the world.

We are pleased with our global partners and the progress being made in.

In Q2 of 2022, we saw regulatory approval in the Philippines for the extended adjuvant indication and just recently in Q3 <unk> was launched in Spain, and Ecuador received regulatory approval in the metastatic breast cancer indication.

Our global partners are preparing for additional launches and working hard to drive increased adoption I look forward to highlighting their future progress.

Now Puna was founded on a commitment to making a difference in the lives of patients and their families battling breast cancer.

I want to thank our global partners my commercial colleagues and the entire cross functional Puma organization for their continued passion and commitment to making such a difference we know more must be done and we will not stop until we have achieved our goals.

I'll now turn the call over to Maximo for a review of our full financial results.

Thanks, Jeff I.

I will begin with a brief summary of our financial results for the second quarter of 2022.

Please note that I will make comparisons to Q1 2022.

Which we believe is a better indication of our progress as a commercial company than year over year comparisons.

More information I recommend that you refer to our Q2 2022 10-Q, which.

Which will be filed today and includes our consolidated financial statements.

The second quarter of 2022, we reported net income based on GAAP of $9 4 million a 21 per share.

This compares to a Q1 2022 net loss of $3 4 million or <unk> <unk> per share.

The non-GAAP basis, which is adjusted to remove the impact of stock based compensation expense we.

We reported net income of $12 6 million or 28 per share for the second quarter of 2022.

Gross revenue from Nellix sales was $63 4 million in Q2 2022.

It was $51 5 million in Q1 2022.

Alan mentioned it net product revenue from Nellix sales was $51 3 million.

Compared to the $40 7 million, we reported in the first quarter of 2022.

We believe that Q2 Q2 net sales included approximately $2 7 million of inventory built from our distributors.

Royalty revenue totaled $8 2 million in the second quarter of 2022 and.

An increase from $5 million in Q1 2022.

Our gross to net adjustment in Q2, 2022 was 19% compared to the 21% and gross to net adjustment in Q1 2022.

Lower Medicaid share lower co pay on lower coverage gap due to seasonality other main drivers for the decline versus prior quarter.

Cost of sales for Q2, 2022 was $14 9 million.

Including $2 million for the amortization of intangible assets related to our <unk> license.

Cost of sales for Q1, 2022 was $10 8 million.

Going forward, we will continue to recognize amortization of milestones to the license or were about $2 million per quarter as cost of sales.

For the fiscal year 'twenty to 'twenty two.

Reiterate its prior guidance.

<unk> net product revenue will be in the range of $180 million to $190 million.

We also anticipate that our gross to net for the full year of 2022 will be between 20% and 21%.

Slightly better than our prior estimate.

Furthermore, while.

For fiscal year 2022 we anticipate receiving royalties from our partners around the world in the range of $27 million to $30 million.

Lower than our prior guidance due to the timing of our nellix shipments to our partner in China and potential negative foreign exchange impact.

We don't expect license revenue in 2022.

In addition, we expect our full year net income to be in the range of 10, 2%.

$6 million to $10 million.

We recognize there continues to be a great deal of uncertainty regarding the impact of COVID-19, and this may continue to negatively impact sales royalties and license revenue.

Yes.

We anticipate that for Q3 2022, Nellix net sales will be in the range of <unk> $44 million to $47 million.

This guidance assumes that some of the inventory buildup in Q2 is reduced in Q3.

We Additionally, anticipate that we will see an additional increase in inventory in Q4 as we have seen in prior years.

We expect.

Q3 royalty revenues will be in the range of $3 million to $6 million.

This is a reduction in the royalty revenue compared to Q2.

This reduction is caused by the timing of shipments lower part and in China.

According to our agreement.

Through my receives royalties when the product is sold to the distributor in China.

The timing of the shipments and sales.

Have been negatively impacted by the challenges associated with supply chain delays and <unk>.

Areas shutdowns in China.

Precisely forecasting to shipping and delivery times, having challenging therefore, we are conservatively anticipating that shipments we were expecting in Q3 could move to Q4, which was subsequently reduced Q3 royalties and increased Q4 royalties.

We further estimate that our gross to net adjustment in Q3, 2022 will be approximately 19, 5% to 25%.

Puma anticipates, a Q3 net loss between 1 million and $2 million.

SG&A expenses were $20 6 million in the second quarter of 2022 compared to $20 4 million for the first quarter.

SG&A expenses included non cash charges for stock based compensation of $2 1 million for the second quarter of 2022.

<unk> to $2 2 million for Q1 2022.

SG&A expenses in Q2 included a payroll tax credit under the cares act of $2 million.

Research and development expenses were $12 million in the second quarter of 2022.

Compared to $15 2 million for the first quarter.

R&D expenses included noncash charges for stock based compensation of $1 1 million in the second quarter of 2022.

Compared to <unk> 9 million for the first quarter.

R&D expenses in Q2 2022 included a payroll tax credit under the <unk> of $1 8 million.

In the second quarter of 2022 Puma.

<unk> reported cash burn of approximately $14 million compared to cash burn of approximately $17 million in Q1 2022.

Our Q2 2022 cash Burns includes a final payment of approximately $27 1 million related to a class action lawsuit.

As a reminder, in Q1 2022.

We made a payment of $27 1 million related to the class action lawsuit and executed a private placement of 14.

No.

As a result of cost containment across our sorry.

As a result of cost containment actions across the company implemented in the fourth quarter of 2021 Puma continues to expect lower operating expenses in 2022 compared to 2021.

More specifically, we anticipate SG&A expenses to be down approximately 15% to 20%.

R&D expenses to be down 10% to 15% year over year.

At June 32022, we had $68 million in cash cash equivalents and marketable securities.

Our accounts receivables balance was $34 million.

Our accounts receivable terms range between 10 and 68 days.

While our day sales Outstandings are about 44 days.

We estimate that as of June 30, when you turn it to our distribution network maintained at approximately four weeks of inventory.

Overall, we continue to deploy our financial resources to focus on the advancement of neurons through ongoing clinical trials and the commercialization of Netflix.

Yes.

Thanks Massimo.

During 2020 and 2021.

The COVID-19 pandemic presented significant commercial challenges to Puma and presented significant barriers to commercial access for <unk> commercial team.

As Jeff mentioned, we are starting to see a positive trend in face to face interactions of Hcp's.

Which we believe is a result of COVID-19 cases, declining and vaccination and booster rates, increasing resulting in these commercial various reducing however, we also recognize the uncertainty as to whether access to health care providers will continue to trend positively we are remaining conservative in our outlook for improvements in access for this year.

Who is senior management in cooperation with the board of Directors continues to remain focused on improving nearly in sales in 2022 and beyond.

In the fourth quarter of 2021, we implemented a reduction in expenses with the goal of reducing expenses in order to maximize operating cash flows. We believe that the positive net income reported in the quarter was a direct result of these expense reductions.

The company remains committed to continuing to achieve these operational cash flows and we will continue to reduce expenses if needed to achieve this we look forward to updating investors on this in the future.

There continues to remain a significant unmet need for patients battling breast cancer lung cancer and other solid tumors. We have puma are committed and passionate about finding more effective ways and helping these patients during their journey and we'll continue to strive to achieve that goal.

This concludes today's presentation, we will now turn the floor back to the operator for Q&A operator.

Thank you.

We will now begin the question and answer session.

If you wish to ask a question. Please press star one on your telephone keypad.

Mason indicate your line is in the question queue.

You wish to withdraw your request please press star two.

For participants using speaker equipment and may be necessary to pick up your handset before pressing the starkey.

Our first question comes from the line of Geoff Meacham with Bank of America. Please proceed with your question.

Good afternoon. So this is how <unk> for Geoff Meacham.

For the question. So I think my first question is as many as.

As we mentioned even call me recovery Youre seeing more life interactions.

For your sales force and just wanted to.

You can come onto southwest structure do you see any.

Change needed to adapt to the small lysine direction.

Say, you're seeing seeing may be the mix of virtual plus life.

That would be sort of.

The new normal moving forward.

Okay.

Hey, Al I appreciate that question and then makes it makes good sense, what I will tell you is a couple of things. One we're we firmly believe <unk> promotional sensitive so getting that salesforce share of voice out there is very important to us we're very happy to see that lie visits continue to increase in Q1 versus Q2, and we certainly hope that <unk>.

<unk> continues.

We did restructure in the latter half of last year I can tell you that I feel currently like we are at the right size to capitalize on the opportunity given some of the restrictions that are out there in the oncology space and specifically your comment and that's something I do believe the new normal will be a combination of lie versus virtual.

We pay very close close attention to the effectiveness of our field force and as I said right now we feel good about it if we feel at a later date that things need to change, we'll certainly make adjustments and talk about that that but feel very good right now with the trends and if I can add to that I think that right now we're very comfortable with the size of sales force if we start to.

We see sales growth, which would necessitate we need to increase the size of it we would certainly address that but we would need to see.

A significant trend of sales growth in order for us to increase the size of it.

Awesome. Thank you.

Thank you.

Your next question comes from David <unk> with Cowen. Please proceed with your question.

Hi, Thanks for taking my question. This is <unk> on for Mike.

With this as more of a clarification, but will you guys be presenting updated hurricanes mutated breast cancer data before taking it to the FDA or can we expect kind of a concurrent disclosure of the data along with that go no go label expansion decision.

And then just curious if we could get a little bit of color on the <unk>.

Lines rates now that.

That dose titration regimen has been on the label for about a year now thank you.

Yeah.

Alright.

The first one.

<unk>.

I would anticipate we will probably present updated data on the.

Basket trial, the summit trial for breast cancer at.

The San Antonio breast cancer meeting that will be my assumption.

Whether or not we would do it concurrent with a.

FDA disclosure or just presented at the meeting I don't know the answer to that would depend on which the timing of when those are occurring but I would anticipate there will be additional disclosure of the data this year.

And Jamie let me take that second question regarding dose escalation and if we're seeing an impact on duration of persistency.

Again, we're very happy to see the adoption continue to grow as you see and you look at the slide the majority of that increase adoption did it did occur within the last year.

Following the inclusion of dose escalation into our label so that yearly cohort of patients has not had enough time to mature, but we're certainly monitoring that group, but let me let me give you some more insight there looking back at fully matured yearly cohorts what I can tell you. What we've seen is we've seen a steady increase in the length of therapy going back.

2018, 2019, and 2020 for patients who started on a lower dose with the largest increase in compliance occurring in 2020 or more recently.

Now if I look at smaller cohorts, even look at some monthly cohorts as seen in the last Q4 Q1, what I can tell you also as we monitor those patients who start on lower dose. We clearly don't have the ability to follow that entire length of therapy, because those cohorts havent matured, but if you think about dose escalate.

<unk> likely to have the biggest impact in the first month or two what I can tell you is that we see a benefit in the tune of about 5% to 7% increase in compliance between.

One in month two so we are seeing that benefit now will that benefit continue to play out for the full length of therapy I don't know yet we will follow that very closely but we do like to see that early positive impact. We also know through market research that physicians are very positive physician staff are very positive.

And we've got strong podium support.

I will point out the obvious though that adherence has many other factors besides length of therapy from treatment fatigue overall benefits cost side effects et cetera. So we are watching those cohorts very closely.

That's very helpful. Thank you so much.

Youre welcome.

Your next question comes from the line of Gena Wang with Barclays. Please proceed with your question.

Hi, This is sheldon on for Gena, Thanks for taking my questions.

Maybe something on the Opex.

Yeah.

Guidance on the cost cutting.

D in SG&A, but so far for the <unk>.

First two quarters of the year. It seems like if the trend continues you will probably see.

More much more cost savings in your guidance.

Expect second half to ramp up on both R&D and SG&A.

And more longer term, how do you what efforts would you.

For the make to achieve more sustainable profitability. Thanks.

Hi, sorry can you clarify your question regarding the fee.

Expenses, the R&D expenses in the G&A.

Yes.

Okay.

I think if you.

Let's just take the second quarter run rate it seems like the <unk>.

R&D and SG&A will come.

With a higher reduction of.

Expense.

Guidance of 10% to 15% in R&D, a 15% to 20% SG&A is that correct.

And.

If you achieved any cost saving in those range seems to imply that the second half we will have some ramp up.

So just to clarify right as I mentioned on the call.

Q2, we had a credit.

<unk> credit on our payroll for about $3 8 million so.

Need to net that out of the run rate if youre looking at that and also if you look on a comparison of Q2 versus year to date versus the prior year last year, we had a onetime warrant.

Costs and stock based compensation. So you need to also take that into account.

I think thats the difference thank you so much.

My second question is on the market.

Long term profitability.

Yes, okay. So in terms of your second question as we gave you guidance, we are expecting to be.

Net income positive for the year I believe we said.

$1 million to $2 million net loss in Q3 and that would obviously imply Q4 is positive net income again, we certainly recognize the importance of being net income positive and cash flow positive and absolutely as I said at the end of my speech.

US focusing on protecting those cash flows and net income is something very important to us. So if additional cost cuts need to be made.

To continue our.

The company being cash flow positive and net income positive.

We are of course committed to doing that.

Thank you so much.

Okay.

Thank you. This concludes our question and answer session I would like to turn the conference back to Mary Anne for closing remarks.

Thank you for joining us today as a reminder, this call may be accessed via replay of the webcast at Puma Biotechnology Dot com beginning later today have a good evening.

Ladies and gentlemen, thank you for participating on today's conference call. This concludes our program everyone have a great day you may now disconnect.

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