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Puma's (PBYI) Earnings and Revenues Beat Estimates in Q1

Zacks Equity Research

Shares of Puma Biotechnology, Inc. PBYI were up 12.3% on May 8 after the company announced better-than-expected earnings results for the first quarter of 2020 on the previous day.

In fact the stock has rallied 26.9% so far this year compared with the industry’s increase of 5.2%.

Puma Biotech incurred a loss of 43 cents per share in the first quarter of 2020, significantly narrower than the Zacks Consensus Estimate of a loss of 79 cents but wider than the year-ago loss of 26 cents.

The loss per share includes an impact of stock-based compensation expense. Excluding such impact, adjusted loss per share was 20 cents per share versus earnings of 20 cents in the year-ago quarter.

Total revenues consisted of net product revenues from the sales of Nerlynx, Puma Biotech's only marketed drug, and license and royalty revenues. In the first quarter, total revenues were $51.2 million, comprising $48.6 million of product revenues from Nerlynx, $0.6 million of royalty revenues from licensing partners and license revenues worth $2 million. Sales beat the Zacks Consensus Estimate of $44 million. However, the top line was lower than the year-ago figure of $99.1 million due to lower license revenues.

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.

Sales of Nerlynx increased 6.6% year over year but declined17.2% on a sequential basis. Nerlynx’s bottle volumes contracted 18.2% sequentially in the quarter. However, total prescription rose 6.8% as well as new prescriptions improved sequentially in the first quarter.

Nerlynx sales exceeded management’s earlier expectation of $40-$42 million, which pushed up the stock price.

Total operating costs in the quarter were $65.5 million, down 26.5% year over year. Research and development expenses (including stock-based compensation expense) were $25.5 million in the quarter, down 28.5% from the year-ago period. Selling, general and administrative expenses (including stock-based compensation expense) declined 32.1% year over year to $30.9 million.

Meanwhile, last week, Puma Biotech’s licensing partner CANbridge Pharmaceuticals received a marketing approval for Nerlynx in mainland China. Nerlynx is already approved in Argentina, Singapore and Hong Kong where it is marketed by its partners Pint Pharma, Specialised Therapeutics Asia and CANbridge, respectively. Puma Biotech receives royalties from the sales of Nerlynx in those territories.

2020 Guidance

For the full year, Puma Biotech expects Nerlynx sales in the range of $215-$225 million, unchanged from its previous guidance. Meanwhile, royalties from global partners are expected in the $3-$5 million band, which were earlier expected within $5-$10 million while licensing fees are expected in the bracket of $2.5-$22 million.

Puma Biotech now expects Nerlynx’s net revenues in the range of $48-$50 million for the second quarter of 2020.

Pipeline & Other Update

Notably, in February 2020, the FDA approved Nerlynx in combination with Roche’s Xeloda to treat third-line HER2-positive metastatic breast cancer, based on data from the phase III NALA study. A decision from the regulatory agency was expected in April this year. Hence, this approval comes almost two months ahead of the scheduled date.

The sNDA was based on data from the phase III NALA study, which assessed the combination of Nerlynx + Xeloda compared to Xeloda plus Novartis’ NVS Tykerb (lapatinib) for treating patients with HER2-positive metastatic breast cancer, who have failed two or more prior lines of treatment.

The approval to include the NALA study data in Nerlynx’s label should help address a broader breast cancer population, which can drive the drug’s sales higher in the future.

Several studies on Nerlynx targeting different types of breast cancer patient populations and in earlier-line settings are currently underway.

A key analysis of Nerlynx is the phase II SUMMIT basket study for treating solid tumors in patients with activating EGFR, HER2 or HER4 mutated cancers. Puma Biotech plans to report data in the fourth quarter of 2020 from the HER-positive breast and cervical cancer cohort of the SUMMIT study on Nerlynx in patients with HER2 mutations.

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

Zacks Rank & Key Pick

Puma Biotech currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the healthcare sector is Menlo Therapeutics Inc. MNLO, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Menlo Therapeutics’ loss per share estimates have narrowed 28% for 2020 and 50% for 2021 over the past 60 days.

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