On November 9, 2017 Puma Biotechnology, Inc. (NASDAQ: PBYI), a biopharmaceutical company, reported financial results for the third quarter and nine months ended September 30, 2017 (Press release, Puma Biotechnology, NOV 9, 2017, View Source [SID1234521899]). Unless otherwise stated, all comparisons are for the third quarter and nine months of 2017 compared to the third quarter and nine months of 2016.
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On July 17, 2017, Puma Biotechnology received approval from the U.S. Food and Drug Administration (FDA) for NERLYNX (neratinib) for the treatment of early stage HER2-positive breast cancer following adjuvant trastuzumab-based therapy, and began shipments to wholesalers at the end of July 2017. In the third quarter of 2017, the Company reported net revenue from initial sales of NERLYNX of approximately $6.1 million.
Based on accounting principles generally accepted in the United States (GAAP), Puma reported a net loss applicable to common stock of $77.2 million, or $2.07 per share, for the third quarter of 2017, compared to a net loss applicable to common stock of $65.8 million, or $2.02 per share, for the third quarter of 2016. Net loss applicable to common stock for the first nine months of 2017 was $227.9 million, or $6.15 per share, compared to $203.4 million, or $6.26 per share, for the first nine months of 2016.
Non-GAAP adjusted net loss was $50.7 million, or $1.36 per share, for the third quarter of 2017, compared to non-GAAP adjusted net loss of $36.0 million, or $1.11 per share, for the third quarter of 2016. Non-GAAP adjusted net loss for the nine months ended September 30, 2017 was $144.7 million, or $3.90 per share, compared to non-GAAP adjusted net loss of $115.4 million, or $3.55 per share, for the nine months ended September 30, 2016. Non-GAAP adjusted net loss excludes stock-based compensation expense, which represents a significant portion of overall expense and has no impact on the cash position of the Company. For a reconciliation of GAAP net loss to non-GAAP adjusted net loss and GAAP net loss per share to non-GAAP adjusted net loss per share, please see the financial tables at the end of this news release.
Net cash used in operating activities for the third quarter of 2017 was $54.9 million. Net cash used in operating activities for the nine months ended September 30, 2017 was $136.9 million. At September 30, 2017, Puma had cash and cash equivalents of $79.7 million and marketable securities of $26.6 million, compared to cash and cash equivalents of $194.5 million and marketable securities of $35.0 million at December 31, 2016.
Effective October 31, 2017, Puma entered into a credit facility with Silicon Valley Bank and Oxford Finance for a term loan of up to $100 million, subject to funding in two tranches. The Company received gross proceeds of $50 million from the first tranche of the credit facility upon closing on October 31, 2017 and intends to use the funds for general corporate purposes and to further support NERLYNX commercial initiatives. The second tranche of $50 million may be drawn at the Company’s option and is subject to the achievement of certain milestones. The loan will mature on October 31, 2022.
"With the U.S. approval and launch of NERLYNX in the third quarter, we began providing early stage HER2-positive breast cancer patients with an additional option to reduce their risk of disease recurrence," said Puma Chief Executive Officer and President Alan H. Auerbach. "We are pleased with the feedback that we have received from patients, prescribers and payors during the initial launch and we look forward to continuing to execute our commercial activities throughout 2017 and beyond.
"Looking forward, we anticipate the following milestones: (i) reporting additional data from the Phase II CONTROL trial in the fourth quarter of 2017; (ii) receiving a regulatory opinion from the Committee for Medicinal Products for Human Use (CHMP) for neratinib in extended adjuvant HER2-positive early stage breast cancer in the first quarter of 2018; and (iii) reporting Phase III trial results in third-line HER2- positive metastatic breast cancer patients in the first half of 2018."
Product Revenue
Net revenue consists of sales of NERLYNX, Puma’s first and only commercial product to date. The FDA approved NERLYNX in July 2017 and the Company commenced shipment to wholesalers in late July. For the three and nine months ended September 30, 2017, net revenue was approximately $6.1 million.
Operating Expenses
Operating expenses were $83.5 million for the third quarter of 2017, compared to $66.0 million for the third quarter of 2016. Operating expenses for the nine months ended September 30, 2017 were $234.9 million, compared to $203.7 million for the nine months ended September 30, 2016.
Cost of Sales:
Cost of sales was $1.5 million for the third quarter and nine months ended September 30, 2017. The Company had no product sales prior to the third quarter of 2017.
Selling, General and Administrative Expenses:
Selling, general and administrative (SG&A) expenses were $32.5 million for the third quarter of 2017, compared to $14.0 million for the third quarter of 2016. SG&A expenses for the nine months ended September 30, 2017 were $75.8 million, compared to $37.3 million for the nine months ended September 30, 2016. The $38.5 million increase during the first nine months of 2017, compared to the first nine months of 2016, resulted primarily from increases of approximately $24.2 million for professional fees and expenses, $8.2 million in payroll and related costs, $3.2 million for stock-based compensation, $2.4 million for other expenses such as travel and related costs to support the commercial launch of NERLYNX, and $0.4 million for facility and equipment costs. These increases reflect overall corporate growth.
Research and Development Expenses:
Research and development (R&D) expenses were $49.5 million for the third quarter of 2017, compared to $52.0 million for the third quarter of 2016. R&D expenses for the nine months ended September 30, 2017 were $157.6 million, compared to $166.4 million for the nine months ended September 30, 2016. The approximately $8.8 million decrease during the first nine months of 2017, compared to the first nine months of 2016, resulted primarily from decreases of approximately $5.0 million due to a decrease in regulatory submission activity, decreased preclinical study activities and decreased drug supply manufacturing logistics, and $8.0 million for stock-based compensation, partially offset by increases during the first nine months of 2017, compared to the first nine months of 2016, of approximately $2.2 million for internal clinical development, internal regulatory affairs and quality assurance and internal chemical manufacturing, and $2.0 million for consultants and contractors.
Conference Call
Puma Biotechnology will host a conference call to report its third quarter financial results and provide an update on the company’s business and outlook at 1:30 p.m. PST/4:30 p.m. EST on Thursday, November 9, 2017. The call may be accessed by dialing 1-877-709-8150 (domestic) or 1-201-689-8354 (international) at least 10 minutes prior to the start of the call and referencing the "Puma Biotechnology Conference Call." A live webcast of the conference call and presentation slides may be accessed on the Investors section of the Puma Biotechnology website at View Source A replay of the call will be available approximately one hour after completion of the call and will be archived on the company’s website for 90 days.