On August 3, 2023 Puma Biotechnology, Inc. (NASDAQ: PBYI), a biopharmaceutical company, reported financial results for the second quarter ended June 30, 2023 (Press release, Puma Biotechnology, AUG 3, 2023, View Source [SID1234633790]). Unless otherwise stated, all comparisons are for the second quarter of 2023 compared to the second quarter of 2022.
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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 2023 was $51.6 million, an increase from $51.3 million reported for the second quarter of 2022. Product revenue, net in the first six months of 2023 was $98.3 million, compared to $92.0 million in the first six months of 2022.
Based on accounting principles generally accepted in the United States (GAAP), Puma reported net income of $2.1 million, or $0.05 per basic and diluted share, for the second quarter of 2023, compared to net income of $9.4 million, or $0.21 per basic and diluted share, for the second quarter of 2022. Net income for the first six months of 2023 was $3.5 million, or $0.08 per basic share and $0.07 per diluted share, compared to net income of $6.0 million, or $0.14 per basic and diluted share, for the first six months of 2022.
Non-GAAP adjusted net income was $4.6 million, or $0.10 per basic and diluted share, for the second quarter of 2023, compared to $12.6 million, or $0.28 per basic and diluted share, for the second quarter of 2022. Non-GAAP adjusted net income for the first six months of 2023 was $8.8 million, or $0.19 per basic and diluted share, compared to $12.3 million, or $0.28 per basic and diluted share, for the first six months of 2022. Non-GAAP adjusted net income excludes stock-based compensation expense. For a reconciliation of GAAP net income to non-GAAP adjusted net income and GAAP net income per share to non-GAAP adjusted net income per share, please see the financial tables at the end of this news release.
Net cash provided by operating activities for the second quarter of 2023 was $3.3 million, compared to net cash used in operating activities of $13.9 million in the second quarter of 2022. Net cash provided by operating activities for the first six months of 2023 was $5.9 million, compared to net cash used in operating activities of $40.8 million in the first six months of 2022. At June 30, 2023, Puma had cash, cash equivalents and marketable securities of $74.4 million, compared to cash, cash equivalents and marketable securities of $81.1 million at December 31, 2022.
"We are pleased to report both positive net income and positive cash flow for the second quarter of 2023," said Alan H. Auerbach, Chairman, Chief Executive Officer, and President of Puma. "In addition, we announced positive biomarker data from the randomized trial of alisertib plus paclitaxel versus paclitaxel alone in hormone receptor positive, HER2-negative breast cancer at the recent 2023 Annual Meeting of the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper), which will be helpful as we move forward with the clinical development of alisertib in this indication."
Mr. Auerbach added, "We anticipate the following key milestones over the next 12 months: (i) initiating a Phase II clinical trial of alisertib in small cell lung cancer (H2 2023); (ii) conducting a meeting with the FDA to discuss the clinical development and registration pathway for alisertib in hormone receptor positive, HER2-negative breast cancer (Q4 2023); and (iii) reporting data from an ongoing investigator sponsored Phase I/II trial of alisertib plus pembrolizumab for the treatment of patients with Rb-deficient head and neck squamous cell cancer (H2 2023)."
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 2023, total revenue was $54.6 million, of which $51.6 million was net product revenue and $3.0 million was royalty revenue. This compares to total revenue of $59.5 million in the second quarter of 2022, of which $51.3 million was net product revenue and $8.2 million was royalty revenue. For the first six months of 2023, total revenue was $107.3 million, of which $98.3 million was net product revenue and $9.0 million was royalty revenue. This compares to total revenue for the first six months of 2022 of $105.3 million, of which $92.0 million was net product revenue and $13.3 million was royalty revenue.
Operating Costs and Expenses
Total operating costs and expenses were $49.7 million for the second quarter of 2023, compared to $47.4 million for the second quarter of 2022. Operating costs and expenses in the first six months of 2023 were $98.0 million, compared to $94.0 million in the first six months of 2022.
Cost of Sales
Cost of sales was $11.9 million for the second quarter of 2023, compared to $14.9 million for the second quarter of 2022. Cost of sales was $25.1 million for the first six months of 2023, compared to $25.8 million for the first six months of 2022. The decrease was due to lower royalty expense related primarily to the timing of sales made in China by Puma’s sub-licensee, partially offset by increased intangible amortization related to the $12.5 million paid to Pfizer for meeting a commercial sales milestone as of December 31, 2022.
Selling, General and Administrative Expenses
Selling, general and administrative (SG&A) expenses were $24.4 million for the second quarter of 2023, compared to $20.6 million for the second quarter of 2022. SG&A expenses for the first six months of 2023 were $46.8 million, compared to $41.0 million for the first six months of 2022. The $5.8 million year-over-year increase for the first six months resulted primarily from an increase in payroll and related costs of approximately $4.7 million, consisting of approximately $2.5 million due to salary and headcount increases in 2023, as well as a $2.0 million tax credit related to the CARES Act received during the period ended June 30, 2022. In addition, professional fees and expenses increased approximately $0.8 million from the first six months of 2022.
Research and Development Expenses
Research and development (R&D) expenses were $13.4 million for the second quarter of 2023, compared to $11.9 million for the second quarter of 2022. R&D expenses for the first six months of 2023 were $26.1 million, compared to $27.2 million for the first six months of 2022. The $1.1 million year-over-year decrease for the first six months resulted primarily from a decrease in clinical trial expense of approximately $3.6 million, primarily due to the reduction and closure of SUMMIT clinical trial sites, partially offset by an increase in internal R&D of approximately $2.9 million, due primarily to a $1.8 million tax credit related to the CARES Act received during the period ended June 30, 2022, as well as an increase in payroll-related expenses in 2023.
Total Other Income (Expenses)
Total other expenses were $2.6 million for the second quarter of 2023, essentially unchanged from the second quarter of 2022. Total other expenses were $5.4 million for the first six months of 2023, compared to total other expenses of $5.2 million for the first six months of 2022. The $0.2 million year-over-year increase in other expenses for the first six months of 2023 reflects higher interest rates on our outstanding notes as well as imputed interest on a legal settlement, largely offset by increased interest income.
Third Quarter and Full Year 2023 Financial Outlook
Third Quarter 2023
Full Year 2023
Product Revenue, Net
$51 million – $53 million
$205 million – $210 million
Royalty Revenue
$3 million – $5 million
$25 million – $30 million
Net Income
$3 million – $4 million
$20 million – $24 million
Gross to Net Adjustment
17.5% – 18.5%
19% – 20%
Conference Call
Puma Biotechnology will host a conference call to report its second quarter 2023 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 3, 2023. 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.