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Puma (PBYI) Q2 Earnings Miss, Nerlynx Sales Rise, Stock Up

Zacks Equity Research

Puma Biotechnology, Inc. PBYI incurred a loss of 97 cents per share in the second quarter of 2019, wider than the Zacks Consensus Estimate of a loss of 90 cents.

The loss per share includes an impact of stock-based compensation expense. Excluding such impact, adjusted net loss per share was 57 cents per share versus 59 cents in the year-ago quarter.

Total revenues consist of net product revenues from the sales of Nerlynx, Puma Biotech's only marketed drug, and royalty revenues. In the second quarter of 2019, total revenues were $53.9 million, comprising $53.8 million of product revenues from Nerlynx and $0.1 million of royalty revenues from two licensing partners. Moreover, sales beat the Zacks Consensus Estimate of $53.0 million and were also higher than the year-ago figure of $50.8 million.

Nerlynx is indicated for extended adjuvant treatment of HER2-positive early stage breast cancer in patients, previously treated with Roche’s RHHBY Herceptin-based adjuvant therapy. It was approved in the EU last September.

Sales of Nerlynx were up 18% on a sequential basis. We remind investors that a higher number of patients discontinuing treatment with Nerlynx due to its side effects had resulted in a sequential decline in Nerlynx’s sales in the first quarter. Sales improved sequentially in the second quarter due to higher bottle volumes. Nerlynx’s bottle volumes rose 7.6% sequentially in the quarter.

Puma has established a specialty distribution network in the past two years by striking partnerships with physician networks to allow in-office dispensing. Growth in in-office dispensing setting coupled with aggressive sales efforts led to better volumes in the second quarter. The improvement in Nerlynx’s sales and volumes drove the stock almost 23% higher in after-hours trading on Thursday. However, the stock has declined 54.7% this year so far, underperforming the industry’s decrease of 2.5%.

Total operating costs in the quarter were $79.7 million, down 13.6% year over year. Research and development expenses (including for stock-based compensation expense) were $36.9 million in the quarter, down 14.8% from the year-ago period. Selling, general and administrative expenses (including for stock-based compensation expense) decreased 16.5% year over year to $33.5 million.

Pipeline & Other Update

Several studies on Nerlynx targeting different types of breast cancer patient populations and in earlier-line settings are currently underway. In July 2019, the company submitted a supplemental new drug application (sNDA) to the FDA for the approval of Nerlynx in combination with Roche’s Xeloda (capecitabine) to treat third-line HER2-positive metastatic breast cancer. The sNDA was based on data from the phase III NALA study.  If the company gets an approval to include the NALA study outcome on Nerlynx’s label, it will be eligible to treat a broader breast cancer population, which can drive sales higher.

Apart from the HER2-positive breast cancer indication, the company believes that neratinib holds potential for the treatment of several other cancers as well, including non-small cell lung cancer and other tumor types that over-express or have a mutation in HER2.

A key analysis on Nerlynx is the phase II SUMMIT basket study in HER2-mutated cancers. Puma plans to meet with the FDA in the third quarter to discuss the development and regulatory strategy for this study.

In April, Puma entered into a licensing agreement with Pierre Fabre per which the latter will develop and commercialize Nerlynx within Europe and parts of Africa. Pierre Fabre is expected to launch Nerlynx in Germany, the United Kingdom and Austria in the fourth quarter of this year.

In July, Puma’s licensing partner in Canada, Knight Therapeutics gained marketing approval for Nerlynx from Health Canada

Guidance

In 2019, Puma expects Nerlynx U.S. sales to be in the range of $220 million to $240 million. Meanwhile, licensing and royalty revenues from its licensing partners are expected in the range of $56 million to $60 million in 2019

Zacks Rank & Stocks to Consider

Puma Biotech currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the biotech sector include Vertex Pharmaceuticals VRTX and Amgen AMGN, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Puma Biotechnology, Inc. Price, Consensus and EPS Surprise

 

Puma Biotechnology, Inc. Price, Consensus and EPS Surprise

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

Vertex’s earnings per share estimates have moved up from $4.22 to $4.58 for 2019 and from $5.76 to $6.03 for 2020 over the past 30 days. The company delivered a positive earnings surprise in all the trailing four quarters with the average being 17.87%. Share price of the company has increased 10.4% this year so far.

Amgen’s earnings estimates have risen from $13.92 to $14.23 for 2019 and from $14.76 to $14.87 for 2020 over the past 30 days.

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