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Puma Biotechnology Inc (PBYI) Q2 2019 Earnings Call Transcript

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Puma Biotechnology Inc  (NASDAQ: PBYI)
Q2 2019 Earnings Call
Aug. 08, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon. My name is Chantelle, and I'll be your conference call operator today. [Operator Instructions]

I would now like to turn the conference over to Mariann Ohanesian, Senior Director of IR for Puma Technologies -- sorry, Biotechnology. You may begin your conference.

Mariann Ohanesian -- Senior Director, Investor Relations

Thank you, Chantelle. Good afternoon, and welcome to Puma's conference call to discuss financial results for the second quarter of 2019. Joining me on the call today are Alan Auerbach, Chief Executive Officer, President, and Chairman of the Board of Puma Biotechnology; Steve Lo, Chief Commercial Officer; and Maximo Nougues, Chief Financial Officer.

After market closed today, Puma issued a news release detailing second quarter financial results. That news release, the slides that Steve will refer to, and a webcast of this call are accessible via the home page and investor sections of our website at pumabiotechnology.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 events and results may differ from those expressed in these forward-looking statements. For a full discussion of these risks and uncertainties, please review our Annual Report on Form 10-K for the year ended December 31, 2018, and any subsequent documents we file with the US Securities and Exchange Commission.

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 8, 2019. The company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call except as required by law.

During today's call, we may 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 substitute for our GAAP financial measures. Please refer to our second quarter news release for a reconciliation of our GAAP and non-GAAP results.

I will now turn the call over to Alan.

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

Thank you, Mariann, and thank you all for joining our call today.

Today, Puma reported total revenue for the second quarter of 2019 of $53.9 million. Total revenue consisted of product revenue for sales of NERLYNX and royalty revenue. Net sales of NERLYNX were $53.8 million in the second quarter of 2019, an increase of $8.2 million or 18% from the $45.6 million in net sales reported in the first quarter of 2019. Our second quarter results also included royalty revenue of $55,000 from two of our licensing partners.

In a moment, I will turn the call over to Steve Lo, Puma's, Chief Commercial Officer, who will provide an update on NERLYNX commercial activities and progress in the US. In April 2019, we announced that we entered into a licensing agreement with Pierre Fabre, under which Pierre Fabre will develop and commercialize NERLYNX within Europe and parts of Africa.

Pierre Fabre has a well established sales and marketing presence in Europe based on their experience in marketing navelbine, which is also referred to as vinorelbine, which is one of the key chemotherapy drugs used in the treatment of breast cancer. We anticipate that Pierre Fabre will launch NERLYNX in Europe in 2019 and Steve will provide some additional detail on this shortly.

In July, we announced that our licensing partner in Canada, Knight Therapeutics, received marketing authorization from Health Canada for NERLYNX for the extended adjuvant treatment of adult patients with hormone receptor positive, HER2-positive early stage breast cancer, following the completion of adjuvant trastuzumab-based therapy

. In collaboration with our licensing partners, we also anticipate announcing additional regulatory decisions on neratinib for the extended adjuvant HER-2 positive early stage breast cancer indication in additional countries outside of the United States and Europe throughout 2019. We also look forward to additional clinical milestones for neratinib.

As investors are aware, in the second quarter of 2019, we presented results from our Phase III trial of neratinib in third-line HER2-positive metastatic breast cancer, also known as the NALA trial at the American Association of Clinical Oncology Annual Meeting in June. A copy of the ASCO presentation is accessible on the Events and Webcast page of Puma's website.

Based on the results of NALA trial, Puma filed a supplemental New Drug Application or sNDA for neratinib for the treatment of third-line HER2-positive metastatic breast cancer in June 2019. If the sNDA is accepted, we would anticipate a regulatory decision on this filing in 2020. We will continue to update investors as we obtain more information on this timing.

Puma also has an ongoing basket trial of neratinib in HER2 mutated cancers referred to as the SUMMIT trial. In 2017, data was presented at the American Association for Cancer Research meeting or AACR, demonstrating that HER2 mutations were found in approximately 2% to 12% of almost every solid tumor. The initial data from the SUMMIT trial was presented at the AACR meeting in 2017 then published in Nature in 2018.

Additional updated data on the cohort of patients from SUMMIT with HER2 mutated cervical cancer who were treated with neratinib were also presented in the plenary session at the Society of Gynecological Oncology, or SGO, Annual Meeting in March. Puma plans to meet with the FDA during the third quarter to discuss the clinical development and regulatory strategy for neratinib in patients with HER2 mutations. We will continue to update investors as we obtain more information with regard to this matter.

In addition, we reported additional data from our Phase II CONTROL study, involving the use of anti-diarrheal prophylaxis on neratinib associated diarrhea in patients with HER2-positive early stage breast cancer at the ASCO Annual Meeting in June. This included updated data on the cohorts of patients receiving loperamide alone or in combination with budesonide or colestipol, and also included data from the most recent cohort in the trial that uses no anti-diarrheal drugs as prophylaxis, but instead uses a dose-escalation strategy during the first month of treatment in an effort to reduce the side effects and improve the tolerability of the drug. Details from the ASCO presentation are included in a poster that is accessible on the Events and Webcast Page of Puma's website.

As investors are aware, the purpose of the control trial is to investigate the use of anti-diarrheal prophylaxis and dose escalations as a way to reduce the diarrhea associated with neratinib and improve the tolerability of the drug.

In a commercial setting, patient discontinuations have had an adverse impact on NERLYNX revenues as patients tend to discontinue neratinib early in the treatment course, usually the first month, which greatly reduces the potential revenue per patient that we are able to achieve. The current label for NERLYNX only includes data from the loperamide alone arm of control. In this arm of the control trial, discontinuations due to diarrhea or other reasons were 44.5% in the poster presented at ASCO.

In 2018, Puma filed with the FDA to have the label expanded to initially include the data from the loperamide plus budesonide arm of the trial. In the data presented at ASCO, the data from this arm of the trial showed an improvement in the tolerability profile, as only 20.3% of the patients discontinued neratinib due to diarrhea or other reasons. We expect to hear back from the FDA with regard to this label expansion in the fourth quarter of 2019. The company believes the inclusion of this data in the label will increase awareness of the loperamide plus budesonide combination, which could help to reduce discontinuations.

In addition, Puma expects that the interim results of the control trial, including data on the cohorts receiving loperamide alone or in combination with budesonide or colestipol and also from the dose escalation cohorts, will be published in the medical journal in the fourth quarter of 2019, which the company believes will further improve the awareness of these techniques for reducing the neratinib-related diarrhea and improving the tolerability of the drug.

I will now turn the call over to Steve Lo, who will discuss our US commercialization strategy and progress to date with NERLYNX. Steve will then be followed by Maximo Nougues, who will highlight key components of our financial statements for the first quarter [Phonetic] of 2019.

Steven Lo -- Chief Operating Officer

Thank you, Alan. NERLYNX has been in the US market since our FDA approval in July of 2017. Since then, thousands of patients have been prescribed NERLYNX. We look forward to continuing to provide NERLYNX to more patients and reaching more physicians. A reminder that during my presentation, I will be making forward-looking statements.

As you may recall, our network of six specialty pharmacies provide NERLYNX directly to patients. The specialty pharmacies conduct benefit investigations, obtain a prior authorization approval from the insurance company, and then arrange with the patient to send NERLYNX to their home.

We also have a separate specialty distribution in-office dispensing channel where the prescription does not need to be sent to the specialty pharmacy. This helps to facilitate the ability for certain patients to obtain NERLYNX directly from their physician's office, integrated health systems, and also the VA.

To allow better access for patients, we expanded the distribution channel throughout 2018 and into 2019 by establishing partnerships with physician networks. As a result, we have continued to see an increase in patients being dispensed NERLYNX through hospitals and physician practices in the specialty distribution network.

In the second quarter, sales in this channel continued to grow and represented as much as approximately 32% of total bottles sold in certain weeks during the second quarter. Later in the call, Maximo will review the full financial results, but I will now provide you with the current sales results.

On slide four, you see quarterly net sales of NERLYNX since FDA approval. As Alan mentioned, our net product sales revenue was $53.8 million in the second quarter, an 18% increase from the prior quarter. The revenue increase was driven by the higher bottle volumes shown in the next slide. We experienced an increase in volume in the second quarter due to several key factors.

Last quarter, I reported that we had a higher than average vacancy rate in our sales force, where 18 of the 80 territories were opened at some point. I am happy to report that as of today, all of those previously open positions are filled. All of these recently trained new hires are now out in the field actively calling on targeted physicians, which has increased our presence in the field. We have also added nurses to our nurse educator team to increase our efforts in educating physician practices and fellow nurses on side effect management for patients.

Secondly, the increase in volume is attributed to growth in dispensing of NERLYNX in the in-office dispensing setting, which is serviced by the specialty distribution channel. As mentioned, we have established partnerships with physician networks to allow for in-office dispensing and continue to see quarter-over-quarter growth in this segment.

Slide five shows the quarterly volume of NERLYNX bottles sold. This represents all channels, specialty pharmacy and specialty distribution. In the second quarter of 2019, we sold 4,791 bottles of NERLYNX, an increase of 7.6% over the first quarter of 2019. Our sales and marketing organizations have continued to increase efforts to educate physicians and patients on the risk of disease recurrence and the rationale for treatment with NERLYNX in the extended adjuvant setting.

In addition, we increased efforts to educate physicians, nurses and patients about the importance of anti-diarrheal management. As mentioned in the past, the primary reason why a patient discontinues NERLYNX early is due to side effects. The discontinuations occur more frequently in the first month. While most physicians prescribe an anti-diarrheal medication with NERLYNX, our research continues to show that some physicians may not fill the anti-diarrheal prescription.

There were also some physicians not prescribing any anti-diarrheal prophylaxis medications at all, which we believe was due to the lack of awareness of the data from our control trial using prophylactic anti-diarrheal drugs. As you may recall, we launched our supportive care voucher to help eliminate the financial barrier for patients to obtain loperamide, budesonide, colestipol or other anti-diarrheal medications.

In addition to this, we have a concerted effort to reeducate doctors about dose reductions and dose holds to increased tolerability. This allows patients to stay on NERLYNX and not permanently discontinue. All of these options continue to be highlighted by practicing oncologists in peer-to-peer exchanges. Moreover, we have our own dedicated nurse educator team, which also help educate practices and specifically fellow nurses, who often are the ones in the practice who educate patients about side effect management. As mentioned earlier, we have recently added more clinical nurse educators to the team in an effort to improve NERLYNX tolerability.

On slide six, you see that most patients receive NERLYNX in 10 days or less, and 74% of these patients receive it in 15 days or less, which we believe is a continued sign of a smooth reimbursement process and continued good payer coverage. This has been consistent throughout the time NERLYNX has been in the market.

There is a small number of patients who have been prescribed NERLYNX for off-label use such as metastatic HER2-amplified or HER2-mutated cancer, which we do not market or promote where the insurance company needs more information. These situations continue to contribute to longer field times shown on the right hand side of the slide.

Now, on to prescribers on slide seven. We continue to make progress in reaching our target physician audience, increasing to 75% in the second quarter. This represents physicians who our sales force has met with, not physicians who have prescribed the drug. Since there are more physicians restricting access to sales reps, we have used other opportunities to reach them through medical conferences or online, which is not reflected in the numbers here.

The discussion with physicians regarding prescribing NERLYNX involves establishing the need to reduce recurrence, a discussion on the efficacy and also providing education on managing side effects. This requires numerous interactions, which we are highly focused on doing. Therefore, when we look at reach, we also focus on the frequency and quality of the interactions. In future earnings presentations, we will likely be replacing this metric with one that gives more transparency into our depth of reaching the prescriber base.

As Alan mentioned, we are committed to making NERLYNX available to patients across the world. We have formed great partnerships throughout the world with companies who have commercial and regulatory expertise in that region. We are pleased with the recent approval in Canada and look forward to more this year as you see in slide eight.

Specifically to Europe, as Alan mentioned, we are partnering with Pierre Fabre. With our regulatory approval in the EU, Pierre Fabre is currently planning on launching NERLYNX in Germany, the United Kingdom and Austria in the fourth quarter of this year.

To summarize, we were able to sequentially grow sales from Q1 to Q2. We are intensely focused on improving our continued progress with physicians, payers, and patients. We continue to reach more prescribers and dedicate important resources to help patients receive and stay on their medication. We are committed to ensuring all appropriate patients have access to NERLYNX.

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

Maximo F. Nougues -- Chief Financial Officer

Thanks, Steve. Let me start with a quick summary of our financial results for the second quarter of 2019. Please note that I will make comparisons to Q1 2019 and Q4 2018, which we believe are better indications of our progress as a commercial company than year-over-year comparisons. More information, I recommend that you refer to our 10-Q, which includes our consolidated financial statements.

With the second quarter of 2019, we reported a net loss based on GAAP of $37.4 million, or $0.97 per share. Our GAAP net losses from Q1 2019 and Q4 2018 were $10.1 million and $30.7 million, respectively. Q1 2019, we booked a $16.4 million net expense as a result of a March 2019 jury verdict against Puma in the lawsuit. As you may recall, in Q4 2018, we recorded approximately $9 million of expense for estimated damages pursuant to a jury verdict in a separate lawsuit.

On a non-GAAP basis, which is adjusted to remove the impact of stock-based compensation, we reported a net loss of $22 million, or $0.57 per share for the second quarter of 2019. Gross revenue for NERLYNX sales was $50.3 million in Q2 2019 versus $55.7 million in Q1 2019. As Alan and Steve mentioned, net revenue for NERLYNX sales was $53.8 million, an increase of 18% from net sales of $45.6 million for the first quarter of 2019.

Our gross-to-net adjustment in Q2 was about 11%, a significant improvement from the 18% net adjustment in Q1. As we noted in our last call, main drivers of Q1 adjustments were a true-up of additional Medicaid charges from 2018 of about $2 million that we had previously not been billed for, higher Medicaid claims and higher coverage gap on co-pay assistance expenses during Q1 2019. We expect the gross-to-net to continue near Q2 levels for the remainder of 2019.

Cost of sales for the second quarter was $9.3 million, included the amortization of milestone payments to the licensor of neratinib of approximately $1 million. Going forward, we will continue to recognize amortization of the milestone payments to the licensor for about $1 million per quarter as cost of sales.

For fiscal year 2019, Puma anticipates that NERLYNX net US sales will be in the range of $220 million to $240 million. We continue to anticipate that gross-to-net will be approximately 13% for the full-year 2019. We further anticipate that Puma will receive licensing and royalty revenues from its licensing partners in the range of $56 million to $60 million in 2019. This number includes recognition of the $51 million upfront license fee from Pierre Fabre that was recognized in the first quarter.

SG&A expenses were $33.5 million in the second quarter of 2019, compared to $45.5 million and $41 million for Q1 2019 and Q4 2018, respectively. SG&A expenses included non-cash charges for stock-based compensation of $7.4 million for the second quarter of 2019, compared to $9.9 million and $7.9 million for Q1 2019 and Q4 2018.

Research and development expenses were $36.9 million in the second quarter, compared to $35.7 million and $38.4 million for Q1 2019 and Q4 2018, respectively. R&D expenses included non-cash charges for stock-based compensation of $8.8 million compared to $8.3 million and $10.6 million for Q1 2019 and Q4 2018.

In the second quarter of 2019, Puma reported cash burn without one-time events of approximately $14.3 million, compared to cash burn of approximately $15 million in Q1 2019 and positive cash flows of approximately $8 million for Q4 2018. We ended the second quarter of 2019 with $117.7 million in cash, cash equivalents and marketable securities.

This includes the impact of the $60 million upfront payment from our European licensing agreement, which was received in early April. As disclosed previously, Puma repaid $155 million outstanding loan under its prior credit facility using cash on hand and $100 million in new borrowings from an amendment and restated loan and security agreement.

Our accounts receivables at June 30, was $25.3 million. Our accounts receivable turns range between 10 days and 68 days, while our day sales outstandings are about 43 days. Our distribution network maintains approximately three weeks of inventory.

Overall, we continue to deploy our financial resources to focus on the advancements of neratinib to ongoing clinical trials and the commercialization of NERLYNX.

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

Thanks, Maximo and Steve.

We are pleased to see the sequential improvement in NERLYNX revenues during the second quarter. Puma senior management in cooperation with the commercial Committee of the Board of Directors continues to remain focused on NERLYNX revenues and sales growth in 2019 and beyond.

This concludes today's presentation. We will now turn the floor back to the operator for Q&A. Operator?

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from Alethia Young, Cantor Fitzgerald. Go ahead, please.

Alethia Young -- Cantor Fitzgerald -- Analyst

Hey, guys. Thanks for taking my question, and congrats on solid quarter this quarter. Maybe just two, if I may. I just wanted you to talk a little bit about potential for any kind of seasonality as we think about kind of heading into the third quarter. I don't know if we've seen it before, but I just want you to kind of opine on that.

And then second, as we think about UK, I mean EU launch, can you just talk about maybe some of the potential country dynamics, will it be kind of -- will be similar as the United States or do you think kind of the issues there same was like discontinuations related to the side effects will be the same, just if you can kind of help us think about that? Thank you.

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

Hi, Alethia. So in terms of your first question on seasonality, I'm not aware of us seeing any seasonality, third quarter or fourth. I don't remember us seeing anything in -- now again, we've only been on the market for two years. But I don't remember us seeing any seasonal dynamics in Q3 of '18 or Q4 of '18.

For the second one, on the EU launch, Steve, would you like to take that?

Steven Lo -- Chief Operating Officer

Sure, Alan. Yeah, your question around, are there different dynamics in Europe versus the United States and specifically for Germany? I think the important takeaway is, number one, it's a single-payer healthcare system. And secondly, most patients are going to be seen in more of a hospital type setting, which in our opinion is helpful because there is a lot of oversight of the patient in terms of discontinuations. The good news is our partner is acutely aware of this, and we have been working very closely with them in terms of best practices in the United States.

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

And Alethia, I'd also add to that. Our partner, Pierre Fabre, they marketed and have marketed navelbine, which is vinorelbine for long time. So, I think they probably have a nice amount of experience because it's chemotherapy, with educating doctors on side effects and how to manage them. So, I think we have a good deal of faith in that.

Alethia Young -- Cantor Fitzgerald -- Analyst

Just one quick follow-up. Have you guys secured reimbursement with NICE in the United Kingdom, yet?

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

So I believe yesterday NICE actually came out with their preliminary recommendation. I believe they put out a press release on it, it's not final yet, but that was their draft. So, I believe as Steve said in his comments, Pierre Fabre has communicated to us, they are planning to launch in Germany, Austria, and the UK in 2019. And as I said, NICE just came out with a recommendation, I believe it was yesterday.

Alethia Young -- Cantor Fitzgerald -- Analyst

Great. Thank you.

Operator

Thank you. Your next question comes from Yigal Nochomovitz from Citi. Go ahead, please.

Yigal Nochomovitz -- Citigroup -- Analyst

Okay. Hi. Thanks for taking the questions, Alan. Just want to clarify. So, you saw an 8% bottle increase but then 18% revenue increase. So, could you just explain, I'm assuming that's because of an inventory build, given there was no price increase. Could you just clarify that first? Thanks.

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

Yeah. Hi, Yigal. The gross-to-net, there was no inventory build. We stayed at three weeks of inventory in the channel. It was three weeks in Q1, three weeks in Q2. The other delta there is the gross-to-net. So the gross-to-net went from 18% in Q1 to 11% in Q2.

Yigal Nochomovitz -- Citigroup -- Analyst

Okay. Got it. And then on NALA, given the presentation at ASCO where you used the restricted means analysis. I just want to get a better understanding of what the regulatory precedent is for this type of analysis when the trial doesn't obey the proportional hazard and what -- how you think the FDA will view that type of analysis once they review it? Thanks.

Steven Lo -- Chief Operating Officer

Hi, Yigal. So, there is regulatory precedence for the restricted means analysis to be put in a label of a drug. This is off the top of my head. I can get back to you with the specifics. I'm almost sure it was Vectibix that used it. And there was at least one or two other drugs, but I know it's been used before. Let me get back to you on that. I know it has been used before. It has been used in the label of drugs before.

Yigal Nochomovitz -- Citigroup -- Analyst

Okay. Got it. That would be interesting. And then the last question I had is, I just wondered if you could, maybe Steve could comment, what you've seen in the market, post ASCO with respect to the diarrhea control strategy, whether given that publication or poster at ASCO, whether you've seen a shift in the market toward more budesonide, loperamide and/or more dose titration relative to just loperamide? Thanks.

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

Yigal, so anecdotally, we have definitely heard from physicians that they like the dose escalation strategy. And this includes a lot of the physicians who are currently using other techniques and also other ones where perhaps they weren't using anything or they were just using loperamide alone and having some challenges with it. So we have definitely heard -- and the optimism has come from a couple of places. One is that it reduces the pill burden on the patients because they're not having to take loperamide so frequently and obviously only having the take NERLYNX and two other drugs makes it a lot easier. The second thing is that it requires another prescription to be filled, right, which is just a challenge for the patients.

Yigal Nochomovitz -- Citigroup -- Analyst

Fair.

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

The third is, remember that these are not metastatic patients who are kind of sitting at home. These are early stage patients who are healthy and at this point in their treatment journey, they've had their reconstructive surgeries, they're done with chemotherapy. Their hair is growing back, they are getting back to work and they're getting back to their normal day-to-day lives. So the dose escalation is a lot better on their quality of life because they're not having to and especially if they have a occupation where they are busy, they're not having to take all these drugs so frequently because as you know with like loperamide, I think it's like every four hours or something they have to take it and with the colestipol, it's twice a day. So it's just -- it's easier for the patients to manage just having to take the NERLYNX first thing in the morning and then they're done.

Steven Lo -- Chief Operating Officer

And I'll add one more thing on top of Alan's comments. A lot of the community physicians have been very positive about this because it's intuitive to them. They have said to us, I already do this with other drugs such as afatinib and this seems very intuitive.

Yigal Nochomovitz -- Citigroup -- Analyst

Okay. Thank you very much.

Operator

Thank you. Your next question comes from Paul Choi, Goldman Sachs. Go ahead, please.

Paul Choi -- Goldman Sachs -- Analyst

Good afternoon, everyone, and thanks for taking our questions. Maybe just a follow-up on your comments with regard to patients making it through their first month of therapy and sticking with it afterwards. A couple of calls ago, you point out an observation that some patients are extending their therapy beyond the initial 12-months. Is that still a trend that you're observing in the market? Has that increased or decreased, or has that remained stable? And then could you maybe just comment on with regard to patient adherence, what percentage of initial prescribed patients are making it through their full 12 months of therapy currently?

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

Okay. So for your first question in terms of patients who are continuing on therapy beyond 12 months, we are still seeing it and hearing about it. We're not currently tracking it. So, I don't have any number I can give you on that. And then in terms of the -- how many patients are making it past one month, et cetera, we don't track that number. And one of the challenges to doing that, is that as Steve mentioned, we're seeing really dynamic growth in the in-office dispensing channel. And oftentimes, we find that the insurance companies will allow the patients to do the first two of their fills, so month one and two via the in-office dispensing and then they have them transferred to the pharmacies.

And so we tend to see that in-office channel because of that, right, a higher percent of those patients are going to be new patients. So therefore, to us in the pharmacy channel, we may see them as month one, but if they have just transferred over from the in-office, it's actually month three. So, it kind of distorts that signal a little bit and it makes little more challenging to try to look at durations.

Paul Choi -- Goldman Sachs -- Analyst

Okay. Thank you for that. And maybe just as a follow-up. With regard to NALA, now that you've done the presentation here, can you maybe give us a sense of how what feedback you've received from the clinical community regards to how they're thinking about their treatment options now that the data is out there. Any initial sense of what receptivity is -- what -- and how that might look for early adoption upon approval and label expansion? Thanks for taking our questions.

Steven Lo -- Chief Operating Officer

So, we have had a lot of feedback on the NALA data from the clinical community. And I would say that by far the data point that we hear the most positive feedback on is the prevention of the brain metastases. Now remember, this is now the third time we've seen a signal with neratinib in preventing or reducing the incidence of CNS metas. This was seen in the ExteNET trial, both in the intent to treat population, but a more dramatic effect in the HR positive population.

We also saw this in a study, which was called NEfERTT, which was our front-line metastatic study, which was Taxol neratinib against Taxol Herceptin, where we reduced the incidence of the brain mets and now we saw it in the NALA trial as well. And the specific feedback we've gotten is that because of the fact that when you get out to the third line or fourth, et cetera setting, you become more and more worried about the brain mets because obviously they are used to seeing them kind of in the first or second line.

So because of that, physicians have said to us, there is no question when you get a third or fourth line patient, it's always on your mind and unfortunately there is no diagnostic test that can tell you who is at a higher risk of developing them and who isn't. So the fact that we've shown that we hear very positive feedback on it.

Paul Choi -- Goldman Sachs -- Analyst

Great. Thanks for taking our questions.

Operator

Thank you. Your next question comes from Corey Kasimov of J.P. Morgan. Go ahead, please.

Neena Bitritto-Garg -- J.P. Morgan -- Analyst

Hi. This is Neena on for Corey. Thanks for taking my questions. The first question we have just about SG&A for the quarter. So it looks like sequentially versus Q1, it was down about 30%, but at the same time, you filled all the open positions. So, can you just talk a little bit about what drove the difference in SG&A? And then I have a follow-up.

Maximo F. Nougues -- Chief Financial Officer

Yes. So talking about SG&A, in Q1, we had to -- we had a significant legal expense. So, it wasn't related to anything that changed on commercial, the change between Q2 and Q1. It was more related to legal expenses where you see the drop.

Neena Bitritto-Garg -- J.P. Morgan -- Analyst

Okay. Great. And then you said in -- I think it was the 4Q call that of the physicians that have been -- that you've detailed, about 60% of them have turned into prescribers, how has that number evolved over kind of Q1 and now Q2, are you seeing higher rate of conversion now as you're reaching out to more prescribers and if not, why not or why do you think that isn't happening?

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

Your comment that on the prior call we said 60%, I don't remember saying that, where was that, when did we say that? I don't -- I'm looking at our transcript from that, I'm not seeing that. Where was that...

Neena Bitritto-Garg -- J.P. Morgan -- Analyst

I think that was the 4Q call.

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

Well, OK. I don't have that transcript in front of me. Yeah. In terms of the-- so as Steve mentioned, we've had 75% of the physicians have been detailed, which means we've met with them, met with them at least once, but obviously it doesn't mean they've all become prescribers. I don't have the number in front of me, in terms of what percent have become prescribers.

Steven Lo -- Chief Operating Officer

Yeah. What I will say is just anecdotally, this is promotionally sensitive. We have to cover a lot of items to include education on risk recurrence as well as side-effect management. So clearly, the more opportunities we have with these physicians, in general, we do eventually convert them to a NERLYNX user.

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

And then just to add more, I would say, we have seen a nice trend every quarter where the number of new prescribers continues to go up. So, that's been a pretty steady growth that we've seen.

Neena Bitritto-Garg -- J.P. Morgan -- Analyst

Okay. Great. Thanks.

Operator

Thank you. Your next question comes from Chris Shibutani, Cowen and Co. Go ahead please.

CJ Zopf -- Cowen and Company -- Analyst

Hi. Good evening. Thank you for taking the question. This is CJ on for Chris. You talked about, you're going to have the potentially control label update for budesonide in the fourth quarter. Now the publication plan for other arms in that trial, do you have other plans beside from that publication to raise awareness of the other arms in the trial that seem to have even better tolerability than a budesonide arm and potentially adding those to the label as well?

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

Yeah. So, I think if I remember correctly in terms of the tolerability -- of the arms that used the loperamide combinations, I thought the budesonide and colestipol were pretty close in terms of tolerability like percent of patients that made it through an entire year. So, we do -- the reason that when we first got approved, the FDA said the only arm of the trial that we had a full-year data on was the loperamide arm so that was when we put in. When we've got the full year of data on the budesonide, we then filed on that one. And obviously the colestipol, et cetera arms will follow. So yes, we of course have plans to update it to colestipol as well as the dose escalation.

In terms of the publication, there are a number of physicians who are kind of no see physicians, so they don't allow a rep to come in and they do their own education work. And so the publication really helps that group and that tends to be a lot of the more higher volume centers to be to raise the awareness of it and so we think that can help out, no question. In addition to that, yes, we do a lot to raise awareness among physicians.

There is online things we do, like the oncol videos and things like that, which we do hear get used quite a bit and then we also tend to do a lot of peer-to-peer events, which can be doctainers [Phonetic] where they share best practices and things like that and we continue to do those as well.

CJ Zopf -- Cowen and Company -- Analyst

Great. So, there's obviously a lot of efforts ongoing in addition to things like the nurse educators that you've mentioned. In the future, what metrics might you be able to share for the various efforts that could demonstrate progress on the discontinuation front?

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

I think revenue would probably be the best one that investors would like to see. So again, because of the fact that patient tend to discontinue early, right now being month one, we can keep them on -- if you look at like any of the clinical trials of this drug, the discontinuations tend to be look somewhat like a barbell. In the sense, meaning you get a lot of them upfront in the first month or two, and then it's a small number going for months kind of three through 11, and then a big jump at month 12 when you get the patients completing therapy.

So, I think the best metric of our ability to educate the physicians on discontinuations and tolerability and improving the tolerability is going to be revenue because as you can imagine, selling a patient 11 or 12 bottles is going to have a much greater impact on revenue than selling them one or two.

CJ Zopf -- Cowen and Company -- Analyst

Great. Thanks very much.

Operator

Thank you. Your next question comes from Michael Schmidt, Guggenheim Securities. Go ahead, please.

Kelsey Goodwin -- Guggenheim Securities -- Analyst

Hey guys. This is Kelsey on for Michael. To kind of help us gauge, I guess the potential opportunity in terms of maybe scripts up for grabs, if you will, kind of per patient, do you have any idea of, kind of -- or could you provide some color on maybe the proportion of doctors that are actually prescribing anti-diarrheal versus the percentage of patients that are prescribed, but don't actually go and fill it I guess where are we seeing kind of the biggest loss or is it kind of comparable across both of those leakage points, I guess. Thank you.

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

Yeah. Unfortunately, we don't get prescriptions on which physicians are using, which regimens and things like that. As you can imagine, prescriptions for loperamide or budesonide or colestipol include lots of other indications. So, we don't get that transparency. I would say that my -- I don't have the numbers in front of me, but I was initially kind of on the top of my head, trying to estimate what kind of discontinuation rates we were seeing in that first month or two. I would say it's probably somewhere in the range of what we've seen in the clinical trials. So, I think somewhere in the ranges that I mentioned. So, it's a pretty meaningful proportion there that as you said, we could recapture, if you will.

Kelsey Goodwin -- Guggenheim Securities -- Analyst

Okay. Thank you.

Operator

Thank you. Your next question comes from Kennen MacKay, RBC Capital Markets. Go ahead, please.

Kennen Mackay -- RBC Capital Markets -- Analyst

Hi. Thanks for taking the question. Maybe just going back to the prior commentary justifying the product sales growth versus volume growth. It seems like even after I back out the gross to net difference, it seems like maybe there is sort of $5 million in gross sales that's unaccounted for, is that falling into sales outstanding? Or can you maybe help us understand sort of where that is going. Maybe the increase moving through the specialty distributors and some on the shelf there

And then separately, just going through the figure on the cumulative prescribers, wondering if you could sort of help us understand active prescribers and if that was really sort of in line with cumulative obviously a different number, but just wondering about the trend there? Thank you so much.

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

Kennen, your first question, in terms of the gain in sales, $4.6 million of the gain is from volume, $3.6 million is on the increase to gross-to-net. There is no increase in inventory. Inventory build is not accounting for the gain. And then what was your second question?

Kennen Mackay -- RBC Capital Markets -- Analyst

Just going to be the trend in the cumulative prescribers, just wondering sort of the active prescribers was following that same trend the physicians have prescribed it previously after being detailed, if they are sort of continuing to prescribe it or you have to sort of redetail, reeducate these physicians as well to keep them prescribing?

Steven Lo -- Chief Operating Officer

So in terms of your second question, in terms of the ongoing number of prescribers. Yeah, we do tend to see physicians who have prescribed it continuing to. Now, a lot of that depends on what volume of patients they see as well. As you can imagine, a high volume center has a constant flow of patients coming in. One that's a lower volume center may not. So, they may not have a patient every month or patient every quarter who comes in, that's an early stage patient. So, that tends to have a lot to do with the frequency.

Kennen Mackay -- RBC Capital Markets -- Analyst

Got you. Thanks, Alan. And maybe a final question if I may. Just going back to the commentary around filling the gaps in the sales force. Congrats on getting those filled. Wondering if there are any existing holes, maybe holes that sort of been following the Q1 report or if this is now sort of full strength? Thanks so much for taking the question.

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

Yeah. So, Kennen, when we talk to our other colleagues in the field -- in the sector, we tend to see that typical vacancy rates are usually between 10% and 15% at any given time. As of today, August 8, here I think we have three out of 80 vacancies, which is a less than 5% vacancy rate. So, I think we're actually lower than the rest of the industry.

Kelsey Goodwin -- Guggenheim Securities -- Analyst

.Got you. Thank you and congrats on that upgrade.

Operator

Thank you. Your next question comes from Thomas Smith, SVB Leerink. Go ahead, please.

Thomas Smith -- SVB Leerink -- Analyst

Hey guys. Thanks for taking the questions. Just looking at the year-over-year bottle shipped, it looks like this remain relatively flat year-over-year. I was just wondering if you could talk about some of the underlying patient demand dynamics here relative to this time last year. How are the new patient starts and discontinuations relative to this time last year?

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

We don't really get the characteristics of the patients in terms of like, are they HR positive or HR negative or that -- we don't really have that information available. So, I don't know if there is a whole lot we can -- we can give you on that.

Thomas Smith -- SVB Leerink -- Analyst

Okay. And then just one follow-up, I guess, regarding the upcoming meeting with FDA to discuss the regulatory strategy for tumor agnostic label in HER2 mutants, can you just give us a sense of what you intend to propose to the agency and how do you envision communicating the outcome of this meeting?

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

So in terms of our meeting with the FDA to discuss how we're going to move forward in the HER2 mutation area, one opportunity would be to go for tumor agnostic label. The second would be TO propose something that's a little more limited to some of the tumor types where we may have seen better activity. So if you look at the data we've presented to date, we've seen very strong activity in areas like breast cancer and cervical cancer and that data has been publicly presented.

And then data in rare tumors like hepatocellular was kind of a weaker. So, we would also have the opportunity to talk to them just about something that's more specific to the indications where we've seen better activity. And there is a good deal of regulatory precedence for doing something like that as well.

Thomas Smith -- SVB Leerink -- Analyst

Right. Okay. Thanks for taking the questions.

Operator

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

Mariann Ohanesian -- Senior Director, Investor Relations

Thank you for your interest in Puma Biotechnology. As a reminder, this call may be accessed via replay of the webcast at pumabiotechnology.com beginning later today. Have a good evening.

Operator

[Operator Closing Remarks]

Duration: 52 minutes

Call participants:

Mariann Ohanesian -- Senior Director, Investor Relations

Alan H. Auerbach -- Chief Executive Officer, President and Chairman

Steven Lo -- Chief Operating Officer

Maximo F. Nougues -- Chief Financial Officer

Alethia Young -- Cantor Fitzgerald -- Analyst

Yigal Nochomovitz -- Citigroup -- Analyst

Paul Choi -- Goldman Sachs -- Analyst

Neena Bitritto-Garg -- J.P. Morgan -- Analyst

CJ Zopf -- Cowen and Company -- Analyst

Kelsey Goodwin -- Guggenheim Securities -- Analyst

Kennen Mackay -- RBC Capital Markets -- Analyst

Thomas Smith -- SVB Leerink -- Analyst

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