On August 4, 2022 Puma Biotechnology, Inc. (NASDAQ: PBYI), a biopharmaceutical company, reported that financial results for the second quarter ended June 30, 2022 (Press release, Puma Biotechnology, AUG 4, 2022, View Source [SID1234617612]). Unless otherwise stated, all comparisons are for the second quarter of 2022 compared to the second quarter of 2021.
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Product revenue, net consists entirely of sales revenue from NERLYNX, Puma’s first commercial product. Product revenue, net in the second quarter of 2022 was $51.3 million, compared to $48.9 million in the second quarter of 2021. Product revenue, net in the first six months of 2022 was $92.0 million, compared to $94.7 million in the first six months of 2021.
Based on accounting principles generally accepted in the United States (GAAP), Puma reported net income of $9.4 million, or $0.21 per basic and diluted share, for the second quarter of 2022, compared to a net loss of $5.1 million, or $0.13 per share, for the second quarter of 2021. Net income for the first six months of 2022 was $6.0 million, or $0.14 per basic and diluted share, compared to net income of $11.3 million, or $0.28 per basic and diluted share, for the first six months of 2021.
Non-GAAP adjusted net income was $12.6 million, or $0.28 per basic and diluted share, for the second quarter of 2022, compared to non-GAAP adjusted net income of $13.1 million, or $0.32 per basic and diluted share, for the second quarter of 2021. Non-GAAP adjusted net income for the first six months of 2022 was $12.4 million, or $0.28 per basic and diluted share, compared to non-GAAP adjusted net income of $35.4 million, or $0.88 per basic share and $0.87 per diluted share, for the first six months of 2021. Non-GAAP adjusted net income excludes stock-based compensation expense. For a reconciliation of GAAP net income (loss) to non-GAAP adjusted net income and GAAP net income (loss) per share to non-GAAP adjusted net income per share, please see the financial tables at the end of this news release.
Net cash used in operating activities for the second quarter of 2022 was $13.9 million, compared to net cash used in operating activities of $0.1 million in the second quarter of 2021. Net cash used in operating activities for the first six months of 2022 was $40.8 million, compared to net cash provided by operating activities of $15.6 million in the first six months of 2021. At June 30, 2022, Puma had cash, cash equivalents and marketable securities of $60.8 million, compared to cash, cash equivalents and marketable securities of $82.1 million at December 31, 2021.
"We are very pleased to report positive net income and earnings per share for the second quarter of 2022," said Alan H. Auerbach, Chairman, Chief Executive Officer, and President of Puma. "This is being driven by the worldwide commercial revenues and royalties from NERLYNX, coupled with our ongoing efforts to reduce operating expenses. Our commercial execution strategy is designed to support increased patient access to NERLYNX, and we are pleased to continue to move forward with our goal of improving the lives of patients battling cancer.
"As per our earlier guidance, in June we reported top line data from the randomized cohort of the Phase II SUMMIT trial of neratinib in hormone receptor positive breast cancer that has a HER2 mutation, as well as final results from the biliary tract cohort of the Phase II SUMMIT ‘basket’ trial at the 2022 Annual Meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper), enabling us to move forward in our goal of demonstrating the effect of NERLYNX across various types of cancer."
Mr. Auerbach added, "We anticipate the following key milestones over the next 12 months: (i) reporting Phase II data from the cohort of patients in the SUMMIT basket trial of neratinib in non-small cell lung cancer patients with EGFR exon 18 mutations (H2 2022); (ii) conducting a meeting with the FDA to discuss the registration pathway of neratinib in HER2-mutated HR-positive breast cancer (H2 2022); (iii) conducting a meeting with the FDA to discuss the registration pathway for neratinib in non-small cell lung cancer patients with EGFR exon 18 mutations who have previously been treated with an EGFR tyrosine kinase inhibitor (2022); (iv) reporting Phase II TBCRC-022 trial data from Cohort 4B and 4C of the combination of Kadcyla plus neratinib in patients with HER2-positive breast cancer with brain metastases who have previously been treated with Kadcyla (H2 2022); and (v) reporting Phase II data from the SUMMIT trial of neratinib in cervical cancer patients with HER2 mutations (H2 2022)."
Revenue
Total revenue consists of product revenue, net from sales of NERLYNX, Puma’s first commercial product, license revenue from Puma’s sub-licensees and royalty revenue. For the second quarter of 2022, total revenue was $59.5 million, of which $51.3 million was net product revenue and $8.2 million was royalty revenue. This compares to total revenue of $53.4 million in the second quarter of 2021, of which $48.9 million was net product revenue, $0.2 million was license revenue received from Puma’s sub-licensees, and $4.3 million was royalty revenue. For the first six months of 2022, total revenue was $105.3 million, of which $92.0 million was net product revenue and $13.3 million was royalty revenue. This compares to total revenue for the first six months of 2021 of $151.6 million, of which $94.7 million was net product revenue, $50.3 million was license revenue received from Puma’s sub-licensees, which included a $50 million upfront payment for providing development, manufacturing, and commercial rights to NERLYNX in Greater China to Pierre Fabre, and $6.6 million was royalty revenue.
Operating Costs and Expenses
Total operating costs and expenses were $47.4 million for the second quarter of 2022, compared to $70.0 million for the second quarter of 2021. Operating costs and expenses in the first six months of 2022 were $94.0 million, compared to $148.1 million in the first six months of 2021.
Cost of Sales
Cost of sales was $14.9 million for the second quarter of 2022, compared to $12.0 million for the second quarter of 2021. Cost of sales was $25.8 million for the first six months of 2022, compared to $41.5 million for the first six months of 2021, of which $20.0 million was for a termination fee paid to a former sub-licensee for the return of commercial rights to NERLYNX in Greater China.
Selling, General and Administrative Expenses
Selling, general and administrative (SG&A) expenses were $20.6 million for the second quarter of 2022, compared to $39.4 million for the second quarter of 2021. SG&A expenses for the first six months of 2022 were $41.0 million, compared to $67.7 million for the first six months of 2021. The $26.7 million year-over-year decrease for the first six months resulted primarily from a decrease in payroll and related costs of approximately $7.2 million, consisting of approximately $5.2 million from lower headcount and a $2.0 million payroll tax credit under the CARES Act; a $4.0 million decrease in consultants fees related to marketing and commercialization support; and a decrease in stock-based compensation expense of approximately $16.0 million, primarily due to the $13.6 million incremental expense resulting from the modification to the term of Mr. Auerbach’s warrant in 2021, and approximately $2.4 million due to lower headcount.
Research and Development Expenses
Research and development (R&D) expenses were $11.9 million for the second quarter of 2022, compared to $18.6 million for the second quarter of 2021. R&D expenses for the first six months of 2022 were $27.2 million, compared to $38.9 million for the first six months of 2021. The $11.7 million year-over-year decrease for the first six months resulted primarily from a decrease in clinical trial expense of $2.8 million; a decrease in internal R&D expense of $5.3 million, which reflects a $3.6 million decrease from reduced headcount and clinical trial activity and a decrease of $1.8 million for a payroll tax credit under the CARES Act; a decrease in consultant and contractors’ expense of $1.8 million, primarily due to the close of the CONTROL study and a reduction in the number of patients being treated in the SUMMIT study; and a decrease in stock-based compensation expense of $1.7 million, primarily due to the impact of headcount reductions in 2021.
Total Other Income (Expenses)
Total other expenses were $2.6 million for the second quarter of 2022, compared to total other income of $11.5 million for the second quarter of 2021. Total other expenses were $5.2 million for the first six months of 2022, compared to total other income of $7.9 million for the first six months of 2021. The $13.1 million year-over-year increase in other expenses for the first six months of 2022 resulted primarily from the recognition of $14.9 million in legal verdict contra-expense in the first six months of 2021, which represented an adjustment to the amount originally recorded for the Eshelman v. Puma Biotechnology, Inc., et al. judgment due to a subsequent ruling on the matter, partially offset by an estimate of service fees incurred related to the class action administrator and pre-judgment interest as a result of the Hsu v. Puma Biotechnology, Inc., et al. claims process.
Conference Call
Puma Biotechnology will host a conference call to report its second quarter 2022 financial results and provide an update on the Company’s business and outlook at 1:30 p.m. PDT/4:30 p.m. EDT on Thursday, August 4, 2022. The call may be accessed by dialing (877) 709-8150 (domestic) or (201) 689-8354 (international). Please dial in at least 10 minutes in advance and inform the operator that you would like to join 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 shortly after completion of the call and will be archived on Puma’s website for 90 days.