Q3 2022 Puma Biotechnology Inc Earnings Call
Yeah.
Good afternoon. My name is Paul and I will be your conference call. Operator today at this time all participants are in a listen only mode. After the Speakers' formal remarks, there will be a question and answer session. If you would like to ask a question during that time simply press. The star Key then the number one on your telephone keypad.
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I'd now like to turn the conference over to Maryann, Paul Hanson Senior director of IR for Puma Biotechnology, you may begin your conference.
Thank you Paul.
Afternoon, and welcome to permit conference call to discuss our financial results for the third quarter of 2022.
With me on the call today are Alan Auerbach, Chief Executive Officer, President and Chairman of the board of Puma Biotechnology, maximizing against Chief Financial Officer, and Jeff Ludwig Chief Commercial Officer.
After market close today Puma issued a news release.
In 2020 to finance.
That news release disliked the third Q and the webcast of this call are accessible via the homepage and investor sections of our website.
<unk> Dot com.
Yes.
The 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.
Constitute forward looking statements for purposes of federal Securities laws.
Such statements are subject to risks and uncertainties natural events and results may differ from those expressed in these forward looking statements.
For a full discussion of these risks and uncertainties. Please.
Thank you our periodic and current reports filed with the SEC from time to time.
Our annual report on Form 10-K for the year.
Our ended December 31, 2021, and our quarterly report on Form 10-Q for the period ended September 32022.
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 November three 2020.
The company undertakes no obligation to revise or update any forward looking statements to reflect circumstances. After the 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 GAAP figures, we believe these non-GAAP metrics may be equal turns out to hit a supplement to but not as substitute for our GAAP financial measures.
Please refer to our third quarter 2022 news release for a reconciliation of our GAAP to non-GAAP results.
I will now turn the call over to Alan.
Yeah.
Thank you Mary Anne and thank you all for joining our call today.
Today Puma reported total revenue for the third quarter of 2020 to $57 1 million.
Total revenue includes product revenue net which consists entirely of new airlink sales.
As well as license fees and royalties from our sub licensees.
Product revenue was $54 3 million in the third.
Third quarter of 2022, which represents an increase from the $51 3 million in product revenue net reported in the second quarter of 2022.
And $43 4 million in product revenue reported in Q3 2021.
Product revenue for the third quarter of 2022 included approximately zero point $5 million.
On the inventory build that our specialty pharmacies and specialty distributors.
Royalty revenue was $2 8 million in the second quarter of 2022, a decrease from $8 2 million in Q2, 2022 and equal to 2.2 point 8 million recorded in Q3 of 2021.
We recorded no license revenue in the latest quarter.
Clinical review of the quarter, and then Jeff Bloodwood blood.
The address additional color are nearly commercial activities and actually known to guess will follow with highlights the key components of our financial statements for the third quarter of 2022.
As investors are aware there is an ongoing clinical trial of Neratinib that is being run by the translational breast cancer Research consortium GB CRC noticed Tv's CRC 22 that is testing the rat named in patients with her two positive metastatic breast cancer that had metastasized to the brain.
The results from the prior cohort of a trial, which tested in ratliff plus keeps that have been in patients with brain metastasis resulted in retina being listed in the <unk> guidelines for the treatment of breast cancer that has metastasized to the brain the.
The current cohort of the trial is testing the combination of Neratinib plus kept silent.
In patients with her two positive breast cancer that has metastasized to the brain. The results from two cohorts of this trial, which tested the combination in patients who have not previously been treated with cats, Iowa and in patients who have previously have been treated with kept silent will be presented at the San Antonio breast cancer Symposium in December as.
As investors are also aware, whom has an ongoing basket trial of Neratinib and hurts you Mucate, David cancers referred to as the summit trial.
Puma plants to meet with the F. D. A in the first half of 2023 to discuss the potential regulatory path for Neratinib before two arms of this trial patients with Homer receptor positive her too negative breast cancer whoever hurts invitation in patients with metastatic non small cell lung cancer with epidermal growth factor or <unk>.
<unk> actually I need Exxon 18, mutations, who previously been treated within Egfr piracy and kind of Ace inhibitor.
In September Poodle was pleased to announce that we in license to anticancer drug al asserted from Takeda.
In clinical trials to date <unk> has shown single agent activity and activity in combination with other cancer drugs in the treatment of many different types of cancers, including hold interceptor positive breast cancer triple negative breast cancer small cell lung cancer and hadn't that cancer.
The drug has also shown activity and previous clinical trials and peripheral T cell lymphoma, and non hodgkins lymphoma.
<unk> previous clinical development program with Alice sort of was extensive and due to this there was a large well characterized clinical safety database with over 1300 patients who were treated across 22 company sponsored trials.
It's currently in the process of transitioning the <unk> program from Takeda to chroma, we anticipate that the majority of this will be completed by the end of the year.
We continue to anticipate.
There'll be several clinical milestones for they all sort of program in the coming months. This includes the publication of the biomarker studies from the randomized trial of al sort of possible vestments versus all sorts of alone at home receptor positive hurts your negative breast cancer, which is expected in Q4 2022 <unk>.
Biomarker data from the randomized trial of Alice sorted plus paclitaxel versus Paclitaxel alone at home receptor positive hurts your negative breast cancer, which is anticipated in the first half of 2023 and data from the ongoing investigator sponsored phase two trial of al assorted.
Plus pember loser map for the treatment of patients with RB deficient head and neck squamous cell cancer, which is also anticipated in 2023.
As mentioned done prior earnings calls and in response to invest a questions public continues to evaluate several drugs.
Potentially in license that would allow the company to diversify itself and leveraged prove as existing R&D regulatory and commercial infrastructure.
Company will keep investors updated on this as it progresses I will now turn the call over to Jeff Ludwig Chief.
<unk> commercial officer for your view of our commercial performance during the quarter.
Thanks, Alan appreciate it and thanks to everyone for joining our third quarter earnings call before.
Before I move into the commercial <unk> Ah review, just a reminder, that I will be making forward looking statements.
The commercial team continues to focus on helping to support more patient battling breast cancer. Our goal is to increase the appropriate adoption, a mirror links and ultimately generate consistent growth.
Our strategy has not changed and remained focused around three areas.
Number one communicating the evolving positive clinical data for nearly two hcp's.
Number two engaging in educating patients around the risk of recurrence as well as the risk benefit profile NERLYNX.
And finally, three increasing our impact and share voice through field force execution.
I stayed on the Q2 earnings call that I felt progress was made on all three fronts I'm pleased to say that progress has continued in Q3 as well.
Additional tools and resources were rolled out to further support our clinical story.
Peak calls per day continued to increase in our field teams further engaged with local and regional advocacy organizations and.
In addition, we saw continued growth in live versus virtual interactions.
More specifically in Q3, approximately 77% of HCP calls re-live versus virtual.
Lastly, we still under links added to more community oncology practice pathways in Q3, which we believe will further support our efforts at increasing adoption moving forward.
Without high level update let me transition to some of the U S. Commercial slides once I finish that will turn the call over to Maxwell for a more detailed review of our financial results.
Starting with slide three R.
Distribution model has not changed we have two channels that provide NERLYNX to patients we refer to these as our specialty pharmacy channel and our specialty distributor channel or in office dispensing channel <unk>.
Most of our business flows through this specialty pharmacy channel in Q3, approximately 80% of our business went through this channel with the remaining 20% of the business flowing through the specialty distributor channel.
We do see slight coordinates fluctuations of this mix, but no significant changes have occurred this year.
Moving the slide four.
Slide four shows U S quarterly net sales of norling since FTA approval.
As Allen noted our net product sales were $54.3 million in the third quarter of 2022. This is a 3 million dollar increase from 30 from the $51.3 million reported in Q2 of 2022.
There was a small inventory increase in Q3, which we estimate contributed about $500000 of this increase.
On slide five you see the bottles of Knurling sold by quarter since launch.
Please note that this slideshows ex factory bottles sold so it represents sales into our specialty pharmacy and specialty distributor channel and not end user demand.
We sold 3197 bottles of NERLYNX in Q3 of 2022, which is almost identical to our queue to 22 bottle sales of 3200.
In Q3, we estimate that inventory increased by about 31 bottles.
Please recall that we saw an inventory build in Q2 of approximately 175 bottles, which is impacting this quarter over quarter comparison.
The commercial team that's been focused on execution with the goal of driving both quarter over quarter growth and year over year growth Q.
Q3 performance aligned with that aspiration and that we saw both quarter over quarter and year over year growth for enrollments, new prescriptions or inner X as well as total prescriptions to your ex now.
Let me provide some additional specifics around his performance.
In Q3, we saw enrollment enrollments grow 7% quarter over quarter and 12% year over year.
The year over year growth rates I'm quoting are comparing Q3 of 2002, two Q3 of 21.
Moving onto new patient starts or interacts we saw 17% quarter over quarter growth and 19% year over year growth.
As we've discussed previously <unk> is an important leading indicators for us as new patient starts to turn into refills, which influence subsequent quarters as well.
This positive trend continued to we're looking at total prescriptions are Trs total prescriptions grew about 5% quarter over quarter in about 2.5% year over year.
This is the first time since launch we have seen positive growth in Enrolments, <unk>, and Tyr X for both quarter over quarter and year over year comparisons.
Moving to slide six we have continued to focus on your education and adoption of Joseph duration and are pleased with the progress being made.
Dose escalation can clearly benefit patients by significantly reducing the amount of green three diarrhea, the medium days of great three diarrhea, and the overall discontinuation rate. We believe the adoption of dose escalation plays a very important role in reshaping the risk benefit profile of NERLYNX.
As previously reported dose escalation was added to the NERLYNX label in late June of last year for both your extended adjuvant indication as well as the medicine like indication.
In addition, NCC an update 2022 clinical practice guidelines to include to include dose escalation in early stage breast cancer.
You can see on slide six we continued to see an increase in the adoption of dose escalation in fact in Q3, approximately 68% of patients who receive commercial drug started NERLYNX on a lower daily dose.
Slide seven highlights the strategic collaborations we have formed across the globe.
We are pleased with our global partners in the progress being made in Q3 NERLYNX received regulatory approval for metastatic breast cancer in both Ecuador, and Singapore and was officially launched in Brazil and Spain.
Launches in Brazil, and Spain, where both any extended adjuvant setting.
Our global partners are focused on driving increased adoption and preparing for future launches.
I look forward to highlighted their continued progress with the goal of making darlings available to more patients around the world.
Puma was founded on the commitment to making a difference in the lives of patients and their families battling breast cancer. We are inspired by the courage and the strength exhibited by many of these patients and are committed to doing more to better support their journey.
I'm Gonna take just a moment to think my commercial colleagues and the entire cross functional Puma organization.
Inspired by their passion and steadfast determination to make a difference and to do more.
I will now turn the call over to Maximo for a review of our full financial results.
Thanks, Jeff.
I will begin with a brief summary of our financial resources for the third quarter of 2022.
Please note, we would make comparisons to two two.
Two.
We believe is a better indication of our progress as a commercial company and year over year comparisons.
For more information I recommend that you refer to R. Q3, 2022. Thank you.
Will be filed today I think.
Those are consolidated financial statements.
The third quarter of 2022, we reported a net loss based on gap of $2.4 million.
<unk> for sure.
This compares to a Q2 2022 net income $9.4 million.21 per share.
non-GAAP basis, which is adjusted to remove the embargo stock based compensation expense.
We reported net income of 2.5 million applied for sure.
2022.
Gross revenue thrown metal itself was $63.4 million.
2328 22.
3.4 million and Q2 2022.
Osama mentioned it net revenue from that in itself was 54.3 million.
Compared to 51.3 million reported in the second quarter of 2022.
We believe that Q3 net sales included in approximately 2.5 minutes of inventory built from our distributors.
Royalty revenue total is $2.8 million in the third quarter of 2022.
A decrease from April 2 million and Q2 22 inches.
Oh gross to admit adjustment in Q3 2000 turned into less about 14.3%.
Prior to the 19% gross to knit adjustment in Q2 2022.
Continue lower Medicaid share high inflation lower co pay lupus seasonality are the main drivers to the decline versus prior quarter.
Cost of sales for Q3, 22 was 12.5 million.
And $2 million for the amortization of intangible assets related related to alert and they're out to Nip license.
Cost of sales for Q2, 20, twenty-two was $14 9 million.
Going forward, we will continue to recognize organizational milestones to their license or or about $2 million per quarter of course ourselves.
For fiscal year 2022, Puma is increasing its virulence guidance.
Now expect in the net mailing spluttered revenue will be in the range of 194 to 196 million.
We also anticipate gross to knit adjustment for the full year 2022 will be between 18% or 19%.
Slightly better than our bronchitis.
Furthermore for the fiscal.
<unk>, we anticipate receiving royalties from our partners around the world and the range of $25 million to $27 million.
Lower than our prior guidance.
Timing of our knowledge shipments.
<unk> our partner in China.
Potential.
Potential negative floating exchange impact.
We don't expect license revenue in 2022.
In addition, we have.
Borrowing hour prior full year net income guidance to a range of seven to 9 million for the year.
We recognize there continues to be a great deal of uncertainty regarding COVID-19, and this may continue to negative impact our sales royalties and license revenue.
We anticipate the four Q4, so I'll need to need to knowledge net sales will be in the range of 48 to 50 million.
This guy's assumes that inventory in queue for Wizard increase as we have seen in prior years.
This guide US also assumes that we will see a sequential decline in new patient starts in queue for around the holidays.
As we have seen in prior years due to the side effect profile of the drug.
We tend to see that many patients delays, so I didn't <unk> until after the holidays, which causes a seasonal decline in your patient starts in Q4.
We expect Q for royalties revenue will be in the range of $9 million to $11 million.
This is an increase in royalty revenue corporate the Q3.
This increases caused by the timing of shipments dwell upon entering China as we explained into doing other protocol.
With further estimate that the gross to knit adjustment in Q4, 2022 will be approximately 18.5% to 19.5%.
Two months dissipates Q for net income between 1 million and 3 million.
SG&A expenses were $24 million in the third quarter of 2022 compared to 26 million for the fourth quarter for the second quarter.
<unk> business included non-cash charges for stock based compensation for $2 million for the third quarter of 2022 compared to 2.1 million four Q2 22.
Two.
Research and development expenses.
11 $2 million in the third quarter of 2022.
Compared to 12 million for the sake of water.
R&D expenses included non-cash charges for stock based compensation obscure point $9 million in the third quarter of 2022.
214, 1 million for the second quarter.
In Q3, 2022, we recorded 7 million us acquire in process of research and development expenses to reflect the $7 million upfront payment with the Qaeda.
The third quarter 2022.
Whom are reported to us.
<unk> $17.4 million compared to cash burn of approximately $14 million in Q2 2022.
R. Q3, 2022 cost does not include the 7 million payment to Tech Ada obviously was executed in October .
As a result of cost containment actions across the company implemented in the fourth quarter of 2021.
Puma continues to spec lower operating expenses 2022 2021.
More specifically, we anticipate SG&A expenses to rebound approximately 23% to 25%.
And R&D expenses, $3, 25% to 27% year over year.
At September 30th 2022, we had approximately $78 million gas Jessica Lynch on marketable securities.
Our accounts receivables violence was $28 million.
Our accounts receivables terms range between 10, and 68 days, while our sales outstanding Autobots 46 days.
We estimate that as of September 30th 2000 to into our distribution network mundane approximately four weeks of inventory.
Overall, we continue to deployed over financial resources to focus on their bus neurotomy through ongoing clinical trials on the commercialization of nowadays.
Thanks to Mexico.
During the 2000 2002 thousand 21.
19 pandemic presented significant commercial challenges diploma and presented significant barriers to commercial access for permits commercial team as.
These restrictions have lifted during 2022, we are seeing increased face to face interactions of hcp's and better access overall as well as Jeff detailed earlier, we believe that this is contributing to the increase commercial results that we are seeing this year and we are hopeful that this will continue the trend positively.
Proof of senior management in cooperation with the board of Directors continues to remain focused on improving yearly sales in 2022 or beyond 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 pub positive cashflow 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 will continue to reduce expenses if needed to achieve this we look forward to updating investors on this in the future.
That continues to remain a significant unmet need for patients battling breast cancer lung cancer and other solid tumors, we get Puma are committed and passionate about finding more effective ways at helping these patients during their journey and we will 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 will now be conducting a question and answer session. If you wish to ask a question. Please press star one on your telephone keypad the confirmation Tamil indicate your line is in the question queue.
You wish to withdraw your question. Please press star two participants using speaker equipment and there'll be necessary to pick up your handset before crossing the <unk>.
One moment, please while we poll for questions.
Thank you. Our first question is from add white with H C. Wainwright. Please proceed.
With your question.
Hey, this is Steve on for AD first question so.
So it looks like the timing for the F. D. A meeting went from.
The second half of 22.
To.
First half for 23 so.
So can you explain what the change over there.
Yeah, Hi, Steve regarding the FDA meetings for the.
Mutated.
And the Egfr mutated we ended up getting the packages to them.
Later than we expected so it's just the timing of one that's expected.
Alright.
And then so let's get the alive interaction went up so do you think the the lifestyle team is the right time.
Steve I feel pretty good about the size of a few enforce right now certainly asthma oncology market is a very restrictive market. So we've seen that access slowed down from you know several years ago.
Right. This moment, we feel like we've got the right size. We can cover all of her key targets across the country with that set of access continues to open up and improve I will certainly work with Alan and well adjusted pure force appropriately, but I believe right now we're roughly the right size and are doing a good job executing our strategy.
Alright, great. Thanks for taking our questions.
Thank you. Our next question is from Jeff Meacham with Bank of America. Please proceed with your question.
Hey, good afternoon. This is half on any like Anthony <unk> Uhm Congrats on how good a commercial <unk>. So I think my first question is related to that uhm.
Could you maybe give us a little bit more color, what some drive and the good commercial <unk>, maybe more of the light interactions with the physician.
<unk>, maybe COVID-19, you know going back to normal which is any color you can provide.
Yeah. Thanks for the question I appreciate it at a high level. What I'll tell you is that NERLYNX is promotionally sensitive so being able to increase engagements and overall sure voice is very important and it certainly has an impact as.
As we talked about we've seen improved overall access which leads to increased productivity by a sales force.
<unk>, we've worked hard on improving our nonpersonal promotion as well in targeting those customers that we're not able to reach the.
Search digital and social media.
I would also say that our teams are done a good job of executing on our peer to peer strategy and our teams have increased their engagement with local and regional advocacy organizations and.
Lastly, I'll throw out that M C C and change their guidelines at the beginning of the year and although that's not gonna drive adoption. It certainly supports the efforts that we're trying to accomplish so it really helps give us some some air cover as well.
If I can add to that I would say you know if you look at all of the metrics like you know HCP interactions per wrap et cetera, they they keep going up a quarter over quarter, which is obviously positive Jeff is exactly right that with you know COVID-19 restrictions you know there were still some cancer centers that had covered restrictions on those had been reduced so that has no question helped us as well.
And I think we do get a lot of feedback from the field force that the change to the N C. C N Guy guidelines, including near links hasn't been very helpful. As well, so I would imagine that that's playing a role too.
Okay, and just a quick on the court so put on the policy you need mortgage so I think that now you have two money code is two developed and then for the S. G. N. A you know for a promotion do you see the need because lively interaction you need muggy sauce in 20 twenties for you to beta promote.
We have not changed our guidance for spending perspective, so I would say, we would not see that that increase and especially on the R&D side, you know remember that with Neratinib, where you know continuing to decrease R&D expenses, because there's less patience on the summit studies and you know some of the <unk>.
Other studies like you know earlier studies like control et cetera, where some of the process of closing down. So those costs are coming out so you've kind of got the crossroads within around this study's going down while the ones from you know all sorted I don't think we'll see a whole lot. This year very small not more next year, but again, you know with one going down in the other growing up it's.
Gonna kind of flattened I would imagine.
Okay. That's helpful. Thank you.
Thank you. Our next question is from being away with Barclays. Please proceed with your question.
Hi, Thanks for taking on question time Regina May have your first just wondering if there are any updates on the parents split between a commercial and medical Medicare Medicare.
And secondly, skew on the patient compliance for new starters, how many percentage you see could stay through the forest like two to three miles worthy.
Stabilized.
Sure Let me, let me dress both of those questions first from a general split up here.
Again to fluctuate quarter by quarter, but I would say for modeling roughly 65% is commercial about 25% would be government Medicare Medicaid V. A D O D and we also see about the remaining 10% is either unidentified or uninsured self pay so that's.
Hopefully that answers that.
In terms of length of therapy, and I think you're asking given the uptake dose escalation. Let me just give you a broader perspective there.
First of all through market research and customer engagement, we know that dose escalation as well received by the majority of physicians and their staff and that physicians that do adopt dose escalation are more likely to start additional patients on NERLYNX going forward.
We also know that persistence and compliance are impacted by other things other than just dosing and side effects, but to address your your specific question do.
Dose escalation is you know per our label has patients increasing dose two folders by week three so thinking about that we would expect to see the benefits of dose escalation in month to month three are David does fluctuate, but we're currently seeing an absolute benefit of about 5% to 7% in decreased discontinuations.
Or increase persistence by month two between the full bells and dose escalation dose is currently dose escalation overall is really important to a strategically and we are not only trying to improve persistence and compliance through additional adoption the dose escalation, but other ways to support patients throughout their journey, so hopefully that helps.
L.
Yep very helpful. Maybe if I could I had a follow up regarding the F. D a discussion.
Just wondering.
If you are going to wait for the biomarker data updated from there at least.
Before you have the discussion was F D R U.
Which is perceived the F D a before that.
We're gonna be proceeding with the F D. A you.
Assuming we have the biomarker data if we don't have it we will probably still proceed with them because yeah.
Yeah, a lot of the populations that we're going after you know for example.
The semic amplified or the army when mutated in small cell lung cancer, we already have that data.
So obviously that can be used for a discussion in other tumors like breast.
If we have it for the breast weekend, obviously, you know involved that as well, but it it won't stop us from having the conversations with FDA unrest around small cell lung.
Thank you.
This concludes our question and answer session I would like to turn the conference back to Marianne for any closing remarks.
Thank you for joining us today as a reminder, this call may be accessed by a replay of the webcast you have proof of biotechnology dotcom beginning later today.
Good evening.
Ladies and gentlemen, thank you for participating in today's conference call. This concludes our program everyone have a great day you may now disconnect.