Puma Biotechnology, Inc. (PBYI) Earnings Call Transcript & Summary

All right. We're going to get started. Up next, we have Puma Biotechnology. With that, Chairman and CEO Alan Auerbach, take it from here.

Great. Thank you. Just a reminder that I'll be making forward-looking statements. So on this slide, you can see Puma's product pipeline. It consists of the drug neratinib, which we have tested across a number of different indications and is also on the market as well. As you can see, the drug is marketed in the U.S., Europe and a number of other countries in extended adjuvant HER2-positive breast cancer. We also have it in testing in metastatic breast cancer, in metastatic breast cancer with brain mets and then in a certain subset of breast cancer patients that have a genetic mutation in HER2. So first, talk about the commercial aspects of our business. We currently sell neratinib, which is a brand name NERLYNX, through a network you can see on the screen, which consists of 6 different specialty pharmacies. And then we also have the group down here that we call the specialty distributors. And these are ones where -- this is actually where the bottle is given to the patient. There's no prescription written, but it's given to the patient in the physician's office. On this slide, you can see our quarterly net sales. This is net U.S. revenue only. Our net U.S. revenue in Q3 of 2019 was $53.5 million, which was a slight decrease from the $53.8 million in revenue in Q2 of '19. One of the main challenges that we've seen with the drug commercially has been that neratinib has a front-end loaded toxicity, which is a Grade 3 diarrhea, which tends to occur in the first month the patient is on the drug. Because of this, we tend to see a very high discontinuation rate of the drug upfront, and it tends to occur in the first month or 2 that the patient is on. We recognized this up front, and we started a trial called CONTROL, which I'll go through in more detail. But the idea was to look at ways of trying to prevent and reduce the upfront diarrhea with the drug and also to improve the tolerability of it. In the trial, we looked at a number of different ways of doing this, including prophylactic use of loperamide, which is also known as Imodium, prophylactic use of another drug called budesonide and colestipol in combination with loperamide, or doing a dose escalation where we start from a low dose and then titrate up in the first month. This last one, which is the dose escalation, as you can see, has resulted in only 13% of the patients discontinuing the treatments prior to 1 year. This is a big drop from the 44.5% that was seen when using loperamide alone. Commercially, this has been a big challenge we've had, which is a lot of patients discontinuing the drug up front, so we've been trying to educate the community on using this dose escalation as a way to try to reduce the discontinuations and improve the tolerability of the drug and, hence, lengthen the number of months of therapy we're able to give to the patient. So we got the data on the dose escalation at ASCO this year. And since then, our sales force has been trying to educate the community on the use of this dose escalation. And on this slide, you can see plotted by quarter the percent of patients that start at a reduced dose. So when they started to reduce dose, this is what the dose escalation is, starting at half a dose of the drug and then titrating up. So as you can see, in Q2 of 2019, 9% of the patients started at a reduced dose. This increased to 18% in Q3, and then our preliminary estimate of Q4 is at 29% of the patients started at a reduced dose. We're hopeful that this can reduce the discontinuations with the drug and improve the tolerability. Obviously, more data will prove whether or not that is the case or not. On this slide, you can see the bottles sold per quarter. In Q4 of 2019, our estimate is that we've sold approximately 4,900 bottles, which is a slight increase from the 4,696 that was sold in Q3. So on this slide, we show the number of the partnerships that we have to commercialize the drug ex U.S. We have a number of partnerships in Europe, Latin America and South America, China, Canada, Israel and Australia. As you can see on the slide, in a number of these, the drug has been approved and/or launched. Most notably in Europe, Pierre Fabre just recently launched the drug in Germany, the United Kingdom and Austria in the fourth quarter of 2019, and we'll be launching throughout the rest of Europe starting in 2020. In all of these deals that we've set up, there were upfront payments with them, milestone payments, and then a back-ended, double-digit royalty. So as I mentioned earlier, we started a trial known as the CONTROL study, and this was to try to improve the tolerability of the drug and reduce the upfront side effects of it. As you can see on the slide, neratinib is given as an extended adjuvant therapy for 1 year. This is similar to the way our commercial indication is. And then in the first month or 2, we give loperamide prophylaxis with or without an anti-inflammatory agent or a bile acid sequestrant, or we do a dose escalation. So this describes it in a little more detail. The first cohort we did is shown on the left, which is using the loperamide prophylaxis alone. We then incorporated an anti-inflammatory drug, budesonide, then a different drug, which is a binding agent, colestipol. And then on the right, we did no prophylactic drugs used, no anti-diarrheal drugs used up front, just a dose escalation where we start at a low dose and then titrate up in the first month. The results of this were just updated recently at the San Antonio Breast Cancer meeting. And you can see the arm that shows the discontinuations leading to diarrhea. We have 20% of them that were seen in the loperamide alone arm. This has obviously dropped nicely in the dose escalation to 3.3%. In our original ExteNET trial, which was where we didn't do anything to prophylax the patients, we were at 16.8%. So obviously, this is a nice drop due to the side effect of diarrhea. But then also, looking at the discontinuations for any reason, including diarrhea, using loperamide alone, 44.5%, that's now dropping to 20% in the most updated data. So that is what we're trying to introduce commercially. The reason for this is to obviously lengthen the amount of time patients are on the drug. The market here is quite large. In the U.S., it's about 28,300 patients who have early-stage HER2-positive breast cancer that are treated with adjuvant therapy; in the EU, 37,000. And our label in the EU is only in the HR-positive patients, and that represents about 65% to 70% of the population. On this slide, we show the current treatment paradigm for the treatment of HER2-positive metastatic breast cancer. Right now, the first-line treatment is taxane, either docetaxel or paclitaxel, given in combination with Herceptin and Perjeta. Second line is T-DM1, which is based on the Phase III EMILIA trial. And then third line, the regulatory standard of care, is Xeloda with Tykerb. And that was where we initially positioned the introduction of neratinib in the metastatic setting in combination with Xeloda. This was our Phase III, known as the NALA trial, which was in third-line or later HER2-positive metastatic disease. These were patients who had 2 or more prior regimens with HER2-directed therapy in the metastatic setting, and it was a head-to-head trial of neratinib plus capecitabine against lapatinib plus capecitabine. The co-primary endpoint was centrally confirmed PFS and OS, and there were a number of secondary endpoints as well, including a time to intervention for CNS metastasis. So this slide shows our primary endpoint was met with a hazard ratio of 0.76 and a log-rank p-value of 0.0059. And as you can see, the curves separated very nicely over time. We had set up a predefined analysis that if the hazard ratio was not constant over time and it was not proportional, we had prespecified a restricted means analysis. And the restricted means analysis showed the delta of 2.2 months, 8.8 months in the neratinib arm and 6.6 months in the lapatinib arm. On the OS, the OS showed a hazard ratio of 0.88. The p-value was not statistically significant at a p-value of 0.2086. And the increase -- the mean increase in OS was approximately 1.7 months. One of the more interesting signals we saw out of this trial was we looked at as a time to intervention for CNS mets. So this was actually measuring the interventions like radiation therapy, surgery or any anticancer medication that occurred when the patient actually got a CNS met. As you can see, there was a nice reduction in the incidence of CNS mets in the neratinib arm. And then we also looked at the overall cumulative incidence of CNS metastasis that was also reduced in the neratinib arm, 22.8% compared to 29.2% in the lapatinib arm. And the p-value on that was 0.043. The third line HER2-positive metastatic market is quite a bit smaller. It's approximately 6,400 patients in the U.S. with third-line disease, about 4,700 with fourth-line disease. Looking at Tykerb, which is kind of the other TKI that is approved right now in the metastatic setting, its U.S. sales were about $68 million in this indication and about $118 million ex U.S. One of the reasons for the disconnect between the U.S. and ex U.S. sales is that Tykerb is approved in combination with the chemotherapy drug Xeloda and a lot of physicians use Herceptin instead of Tykerb because they're looked to be similar. Obviously, in this market, we would have the opportunity to get the market share from the Xeloda-Tykerb patients but also from the Xeloda-Herceptin patients. So in terms of our milestones, we filed our supplemental NDA based on this in June of 2019. The sNDA was accepted by the FDA in September of 2019, and our PDUFA date when they would take action on this would be in April of this year. We also have an ongoing study in the metastatic setting combining the drug with Kadcyla. Kadcyla, also known as T-DM1, is currently the second-line standard of care in HER2-positive disease. It was based on the Phase III EMILIA study, where it was a 43.6% response rate and a 9.6-month PFS that was shown. In that study, the large majority of the patients were Perjeta naïve. And in 2016, data published in the JCO showed that in patients who were previously treated with Perjeta, the response rate tended to decline down to 23% with a median duration of 4 months. We have an ongoing study with the NSABP, which is called the FB-10 study. And in this study, we've mandated that patients had to have seen prior pertuzumab so it is most like the real-world experience. This was a Phase I dose level with neratinib and using T-DM1 at the approved dose. This data was presented at ASCO in 2018, and what we showed was a response rate of 60%. As you can see on the screen, we saw a number of CRs as well as a number of PRs, which we were very pleased with. And the 60% response rate is higher than what was seen in the EMILIA study and then also what was reported in the JCO in Perjeta-treated patients. One of the unique aspects of neratinib is that it does cross the blood-brain barrier. And one of the challenges in treating HER2-positive breast cancer is that a lot of the current drugs do not. About 1/3 of the patients with advanced metastatic breast cancer get metastases that go into the brain. Tykerb is a small molecule that does cross the blood-brain barrier; and as a single agent in 2 trials, one that showed a 2.6% response rate, another a 6% response rate; and then in combination with Xeloda, showed a 20% response rate. Neratinib also crosses the blood-brain barrier. So we have an ongoing study known as TBCRC 022, where we looked at neratinib in patients with brain mets both as a single agent, in combination with Xeloda, and then also we have it ongoing in combination with T-DM1. In terms of the combination with Xeloda, this data was presented at ASCO in 2017 and published in JCO shortly thereafter. And we were very pleased to see a response rate of 49%, which is obviously much higher than what we've seen with Xeloda-Tykerb. Based on this, neratinib was added to the NCCN guidelines for CNS metastasis as a Category 2B recommendation in combination with capecitabine. It is also in there based on a combination with paclitaxel from another trial we did known as the NEfERTT study. Another area we're looking at neratinib in is in patients with a genetic mutation in HER2 that have a -- they're HER2 non-amplified, but there's a genetic mutation in the kinase domain where HER2 is constitutively activated. In the trial, we took patients in who had HER2 mutations, and they either had them in cervical cancer, salivary gland cancer, solid tumors, bladder cancer or HR-positive or HR-negative breast cancer. The 2 I want to focus on are the ones circled in blue, and that's the cervical cancer and the HR-positive breast. So in HR-positive breast cancer, about 7% to 9% of ER-positive breast cancer has a mutation in HER2. It tends to be mutually exclusive, so these patients are not HER2 amplified as well as mutated. They tend to just be HER2 non-amplified. What we do see is there is a cross-talk that occurs between the estrogen receptor and the HER2 kinase domain mutation. And one of the mechanisms we've seen of resistance is that when we hit the tumor both with a ER drug and neratinib, so we hit the estrogen receptor and the mutation, as a mechanism of resistance, the tumor tends to amplify the HER2 receptor. So it switches from being HER2 negative to HER2 positive. So we've had a number of publications from the SUMMIT trial that have come out. We first looked at neratinib as a monotherapy, and that data was published in Nature in 2018. Because of the fact that the patients were ER positive, we knew that there was cross-talk between the 2, we then added fulvestrant. So it was HR-positive disease, so we were hitting both the estrogen receptor and the mutation. And that data was also published in Cancer Discovery. Then because we then saw at the time of progression there was a HER2 amplification, we added on trastuzumab, which is known as Herceptin. And that data was published just recently at the San Antonio Breast Cancer meeting. On this slide, you can see the waterfall plot where you can see the efficacy comparisons. So in the neratinib monotherapy group, and again, these are the patients just with RECIST-measurable disease. And in these patients, there was an n of 18 patients, and then we had a 17% response rate and a PFS of 3.6 months. In the group that had neratinib plus fulvestrant, the response rate increased in the 39 patients to a 30% response rate with a PFS of 5.4 months. In the group that we then added trastuzumab, we then saw in those 17 patients a 53% response rate and a PFS of 9.8 months. This is in all patients, both with measurable disease and nonmeasurable by RECIST. And this is the Kaplan-Meier curve showing the improvement in PFS. Neratinib alone had a PFS of 3.6 months; neratinib plus fulvestrant at 5.7 months; and the triplet, 9.8 months. So we originally spoke to the FDA about what the approval pathway would be for this, and their recommendation was they wanted to get a better understanding of what the contribution of the fulvestrant and the trastuzumab would be to the triplet arm. And so they recommended that we do a Simon 2-stage design where we have patients enrolled to fulvestrant, fulvestrant plus trastuzumab or the triplet arm. There would be initially 7 evaluable patients in each arm. If we see 1 responder, we will increase that to, I think it's 14 -- I'm sorry, to 18 patients, and then we need to see 4 more responders to go to stage 2. We're scheduled to have this data, hopefully, sometime by Q4 of 2020 to Q2 of 2021, at which time we'll have a pre-NDA meeting with the FDA to discuss the initial results of it and then determine the filing strategy. So I'll also talk about the cervical cancer cohort. So about 5% of cervical cancer has a HER2 mutation. It tends to be negatively prognostic for survival. It tends to be enriched in the adenocarcinomas and also in HPV-positive tumors. This data was presented at the SGO meeting last year in the plenary session at their annual meeting. And as you can see, we saw a very nice response rate in the trial and some very nice durations as well. The median PFS in the trial was shown to be 7 months, and this is better than one would assume for the standard of care in this disease. So based on our discussions with the FDA, we're going to continue enrolling the SUMMIT trial for patients with HER2 mutations. The monotherapy data can be used to file for accelerated approval based on the overall response rate and duration of response. And again, once we get more data, we're scheduled to meet with them to discuss this in Q4 of 2020 until -- in the time window of Q4 2020 through Q2 of 2021. So one of the things that we're doing to try to enrich enrollment in the SUMMIT trial is we have an ongoing trial known as HER-Seq. This is a screening protocol where we screen patients and when we find the mutations, we then enroll them in SUMMIT. So the test that we developed is a simple blood test that is a NGS assay which has been analytically validated, CE marked and ISO certified. And it's a simple blood test that sites can use to screen their patients to find HER2 mutations. The way the trial is set up, we screen metastatic breast and cervical patients, and once we find the mutations, we then put them into SUMMIT. If we don't find a mutation, we continue to follow the patient because we often find that the HER2 mutation is a mechanism of resistance to existing therapies. So one of the things that we do is after each therapeutic intervention, we retest them again to see whether or not they've developed the mutation. Right now, the HER-Seq trial is open at about 15 sites. We've got close to 50 sites in SUMMIT. And so we're in the process of expanding it to the other sites to help with enrollment. This again uses a proprietary next-gen sequencing assay for HER2 mutations. Our goal is to screen 2,500 patients with breast cancer and 1,200 with cervical, and that should give us more than enough than we need to go have the discussions with the FDA. And all of the patients that we find through HER-Seq are going to be considered for enrollment in SUMMIT. So in terms of our pathway here, we're looking -- we're in the process of modifying the trial to expand the HER2 mutation breast cohort to the 3 arms that was discussed. We're going to continue to enroll the HER2 mutation cervical cancer cohort. We're also going to expand HER-Seq to expedite the enrollment in SUMMIT. We've gotten a lot of questions from investors on whether or not this is going to have a negative impact to the R&D budget. Because we have a number of large trials that we'll be shutting down or discontinuing, it's going to decrease our R&D budget. So it will open up the opportunity to expand the SUMMIT trial and not have a very negative impact on our financials. And we'll be meeting with the FDA to discuss the results from it sometime between Q4 2020 to Q2 of 2021. In addition, we have a number of ongoing ISTs in HER2 mutations. And as you can see on the slide, we have a number of them that are ongoing in colorectal cancer, in glioblastoma, in breast cancer and then in other tumor types as well. A number of these will be reading out this year and next year. So we'll provide some additional information on neratinib in HER2 mutations. So in terms of the milestones for the company as a whole, as I mentioned, we'll be modifying the SUMMIT trial to expand the HER2 mutation breast cancer cohort, and that's this quarter. We're expecting an FDA decision on the supplemental NDA in the third-line HER2-positive metastatic breast cancer, and that's in the second quarter. We have the potential for the pre-NDA meeting to discuss the clinical data from SUMMIT at sometime between the end of the year and Q2 of 2020. We'll also be reporting updated data from both the HR-positive breast cohort and the cervical cohort from SUMMIT in HER2 mutations at -- in the fourth quarter of 2020 and then reporting additional data from the CONTROL trial in Q4 of 2020 as well. So in terms of the IP on neratinib, the composition of matter patent is issued, and that expires in 2025. We filed for a Hax-Watchman (sic) [ Hatch-Waxman ] extension on this, and that can be extended up to 5 years, which would take that out to 2030. There's also a use patent in the treatment of cancer that is issued, and that goes out to 2025. There's 2 polymorph patents that were issued, and those go out to 2028. There's a combination with capecitabine patent, and that would be the regimen that was used in NALA. That goes out to 2031. We have a specific use patent in extended adjuvant breast cancer that goes out to 2030. The salt that we specifically used for the marketed formulation was recently issued as well. And then we have a number of additional patents that have been issued as well. And if those issue, they can take us out beyond the current expiration date. We also have intellectual property on a related area, which is we have issued claims in Europe, Asia and Australia that expire in 2026 and are extendable up to 5 years. And those claims are for a irreversible EGFR inhibitor for use in treating cancer that has a T790M mutation. The claims also include specific claims in lung cancer and non-small cell lung cancer. This patent was just allowed in the United States. While we're not looking to develop neratinib in this indication, we do recognize that there's a number of drugs that are marketed and in development. And so this would open up a potential licensing opportunity for us. From a management perspective, I act as the CEO and President of the company. Dr. Richard Bryce, who is our Chief Medical and Scientific Officer, has about 20 years of experience in breast cancer development at Onyx, Roche and a number of other organizations. Maximo Nougues, who is our Chief Financial Officer, recently joined us from Getinge, where he was also with Boston Scientific and Clorox in a financial capacity. And then we have Doug Hunt, who is our Senior Vice President of Regulatory Affairs. He's got 25 to 30 years of experience in regulatory, both at large companies like Baxter and Amgen and smaller ones like ArmaGen. The Board of the company is shown on the slide here: Ann Miller, who is a former marketing person at Sanofi, Eisai, Amgen and Merck; Mike Miller, who is the Executive Vice President of Jazz and was formerly the Head of Commercial for the HER2 franchise at Genentech; Jay Moyes, who's a former CFO of Myriad; Hugh O'Dowd, who is currently the CEO of Neon Therapeutics and is the former Chief Commercial Officer of Novartis Oncology; Adrian Senderowicz, who is the Chief Medical Officer for Constellation and has worked with a number of companies, including Ignyta, Sanofi and AstraZeneca; Troy Wilson, who's the CEO of Kura Oncology and a number of other companies as well; and then Frank Zavrl, who's a former partner at Adage Capital. I'd like to point out that in the last 6 months or so, we've added both Ann Miller and Hugh O'Dowd so that we have much more representation on the Board from a commercial capacity. So with both Mike Miller, Ann Miller and Hugh O'Dowd, we've got a very strong background on the Board for both commercial sales and marketing, which we felt was important for shareholders. From a financial perspective, we currently trade on NASDAQ under the ticker PBYI. Our cash, cash equivalents and marketable securities at the end of September was $110 million. Our cash burn in Q3 was about $7 million. We have an outstanding loan with SVB for about $100 million. And it was originally a $155 million loan, and we paid some of it down. So we now have $100 million, and that's just strictly with Oxford. And our issued and outstanding shares is roughly 39.2 million. So just as our highlights. NERLYNX is the first HER2-directed therapy approved by the FDA for extended adjuvant breast cancer in early-stage HER2-positive disease. We have a number of potential other indications as well such as HER2-positive metastatic breast cancer, HER2 metastatic breast cancer with brain mets as well as a number of the HER2 mutations. We retain the full U.S. commercial rights to the drug, and we have a very large initial market opportunity with additional label expansion potential. I want to thank all of you for attending, and I want to thank JPMorgan for allowing us to present. Thank you.