On November 2, 2023 Puma Biotechnology, Inc. (NASDAQ: PBYI), a biopharmaceutical company, reported financial results for the third quarter ended September 30, 2023 (Press release, Puma Biotechnology, NOV 2, 2023, View Source [SID1234636787]). Unless otherwise stated, all comparisons are for the third quarter of 2023 compared to the third 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 third quarter of 2023 was $51.6 million, compared to $54.3 million in the third quarter of 2022. Product revenue, net in the first nine months of 2023 was $149.9 million, compared to $146.3 million in the first nine months of 2022.
Based on accounting principles generally accepted in the United States (GAAP), Puma reported net income of $5.8 million, or $0.12 per basic and diluted share, for the third quarter of 2023, compared to a net loss of $0.4 million, or $0.01 per basic and diluted share, for the third quarter of 2022. Net income for the first nine months of 2023 was $9.3 million, or $0.20 per basic and diluted share, compared to a net income of $5.6 million, or $0.13 per basic and diluted share, for the first nine months of 2022.
Non-GAAP adjusted net income was $8.3 million, or $0.18 per basic share and $0.17 per diluted share, for the third quarter of 2023, compared to $2.5 million, or $0.05 per basic and diluted share, for the third quarter of 2022. Non-GAAP adjusted net income for the first nine months of 2023 was $17.1 million, or $0.36 per basic and diluted share, compared to non-GAAP adjusted net income of $14.8 million, or $0.33 per basic and diluted share, for the first nine months of 2022. Non-GAAP adjusted net income excludes stock-based compensation expenses. 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 provided by operating activities for the third quarter of 2023 was $10.7 million, compared to net cash provided by operating activities of $17.3 million in the third quarter of 2022. Net cash provided by operating activities for the first nine months of 2023 was $16.6 million, compared to net cash used in operating activities of $23.5 million in the first nine months of 2022. On September 30, 2023, Puma had cash, cash equivalents, and marketable securities of $85.0 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 third quarter of 2023," said Alan H. Auerbach, Chairman, Chief Executive Officer, and President of Puma. "In addition, we were pleased to report the FDA’s acceptance of our IND for alisertib and their granting of Orphan Drug Designation to alisertib for the treatment of small cell lung cancer, and we look forward to advancing 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 (Q4 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) initiating a Phase II clinical trial of alisertib in hormone receptor positive, HER2-negative breast cancer (2024)."
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 third quarter of 2023, total revenue was $56.1 million, of which $51.6 million was product revenue, net and $4.5 million was royalty revenue. This compares to total revenue of $57.1 million in the third quarter of 2022, of which $54.3 million was product revenue, net and $2.8 million was royalty revenue. For the first nine months of 2023, total revenue was $163.5 million, of which $149.9 million was product revenue, net and $13.6 million was royalty revenue. This compares to total revenue of $162.4 million for the first nine months of 2022, of which $146.3 million was product revenue, net, and $16.1 million was royalty revenue.
Operating Costs and Expenses
Total operating costs and expenses were $47.5 million for the third quarter of 2023, compared to $54.7 million for the third quarter of 2022. Operating costs and expenses in the first nine months of 2023 were $145.7 million, compared to $148.7 million in the first nine months of 2022.
Cost of Sales
Cost of sales was $13.3 million for the third quarter of 2023, compared to $12.5 million for the third quarter of 2022. Cost of sales was $38.4 million for the first nine months of 2023, compared to $38.3 million for the first nine months of 2022. The year-to-date 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 $22.8 million for the third quarter of 2023, compared to $24.0 million for the third quarter of 2022. SG&A expenses for the first nine months of 2023 were $69.7 million, compared to $64.9 million for the first nine months of 2022. The $4.8 million increase in SG&A expenses for the first nine months of 2023 compared to the first nine months of 2022 resulted from an increase in payroll and related costs of approximately $4.9 million, primarily related to a $2.0 million tax credit under the CARES Act recorded in the second quarter of 2022, salary increases beginning in the first quarter of 2023 and lower turnover during the nine months ended September 30, 2023.
Research and Development Expenses
Research and development (R&D) expenses were $11.4 million for the third quarter of 2023, compared to $11.2 million for the third quarter of 2022. R&D expenses for the first nine months of 2023 were $37.6 million, compared to $38.5 million for the first nine months of 2022. The $0.9 million year-over-year decrease in R&D expenses resulted primarily from a decrease in clinical trial expense of approximately $3.5 million, primarily due to the reduction and closure of clinical trial sites with respect to NERLYNX, partially offset by increases in internal R&D of approximately $3.4 million, due primarily to a $1.8 million tax credit related to the CARES Act recorded during the period ended September 30, 2022, as well as an increase in payroll-related expenses beginning in 2023.
Total Other Income (Expenses)
Total other expenses were $2.6 million for the third quarter of 2023, compared to $2.7 million for the third quarter of 2022. Total other expenses were $8.0 million for the first nine months of 2023, compared to $7.9 million for the first nine months of 2022. The $0.1 million increase for the first nine 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.
Fourth Quarter and Full Year 2023 Financial Outlook
Fourth Quarter 2023
Full Year 2023
Product Revenue, Net
$56 million – $59 million
$206 million – $209 million
Royalty Revenue
$16 million – $19 million
$30 million – $32 million
Net Income
$13 million – $16 million
$22 million – $25 million
Gross to Net Adjustment
15.5% – 16.5%
17.5% – 18.0%
Conference Call
Puma Biotechnology will host a conference call to report its third 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, November 2, 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.