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

Good afternoon, everyone. My name is Gena Wang. I'm midcap biotech analysts at the Barclays. Welcome to our Second Virtual Global Healthcare Conference. First, I wish everyone staying healthy, and I would like to thank all the participants, investors, companies and especially our event team and corporate access team, who made this virtual health care conference possible. With that, I would like to introduce our next presenter, Alan Auerbach, Chief Executive Officer from Puma Biotech. Alan, I hand over to you.

Great. Thank you. So first of all, I would just like to welcome everyone to the Puma Biotechnology presentation. As a reminder, I'll be making forward-looking statements. So on this slide, you can see our product pipeline for the company. We have one drug that we have brought into the company, which is neratinib, and we have it on the market in 2 indications and developed in other indications. The drug is currently FDA-approved and approved in a few other countries in the extended adjuvant HER2-positive early-stage breast cancer setting. We also have approval in the U.S. in the HER2-positive third-line metastatic setting, and we're looking at the drug in development in a number of other settings. One of those settings is HER2-positive metastatic breast cancer that has spread to the brain. And then we have an ongoing trial known as SUMMIT, where we -- which is a basket trial looking at HER2-mutant cancers, and we are specifically looking at it in HER2-mutated HR-positive breast cancer, cervical cancer and exon 18-mutated lung cancer. So the first focus on our commercial side of our business. We currently sell NERLYNX in the U.S., and we have 2 networks on the screen, as you can see that we sell it through. The first one is what we refer to as our specialty pharmacy network. And this is where there's a physical prescription that's written for the drug and then the drug is delivered to the patient. We also have another network we refer to as our specialty distribution network. This is also called our in-office dispensing network. And this is where the patient actually gets the drug at the patient's -- at the point of care. So they actually get it at the hospital or in the physician's office. So here you can see our revenues for NERLYNX since launch. And as you can see, in the fourth quarter of 2020, we did $50 million in sales. That was a slight increase from the $49.3 million in Q3 of 2020. In terms of ex factory bottles sold, you can see here by quarter, the number of bottles sold, and this is both through our pharmacy as well as our specialty distribution network. As you can see in the fourth quarter, we sold 3,585 bottles. That was a slight decline from the 3,611 in Q3 of 2020. One of the well-known side effects of NERLYNX is that the drug causes a severe gastrointestinal disorder, which -- gastrointestinal side effect, which is grade III diarrhea. This tends to occur in the first month or 2 that the patient is on the drug. One of the ways we've found to overcome this is to start patients at a reduced dose of the drug and then titrate up in the first couple of weeks that the patient is dosed. We first got data on this at ASCO in 2019. And as you can see, at that time, about 10.7% of the patients were using this, and so 10.7% of the NRX were using this. We've been tracking this monthly because we have been hearing very positive feedback from physicians. And as we've increased awareness of this, we've noticed that physicians have been -- viewed the drug as being much more tolerable. So as you can see, it increased from 10.7% in Q2 of 2019 when the data came up. It steadily increased up to about the 30% range. We leveled off a little bit due to COVID. And then we were very pleased in the fourth quarter to see 37.5% of the new prescriptions coming in using this dose escalation technique. So in the United States, we market the drug ourselves. Outside the U.S., we have a number of partners, and you can see them on the screen here. For instance, in Europe, China, the Middle East, in what's called the MENA territory, we have Pierre Fabre, who has launched the drug in a number of countries, as you can see, and they've got a number of other ones that they're going to be launching in 2021. We also have a partner specialized therapeutics in Australia and Southeast Asia; Medison in Israel; Knight in Canada; Pint in Latin America and Bixink in South Korea. When these drugs are launched, the partners sell the drug and then we get back a royalty. Then clearly, as the launches expand and as they grow, there's a potential for that royalty to improve. So on this slide, you can see our controlled study. This was a study that we embarked on in our first marketed indication, which is the extended adjuvant HER2-positive breast cancer setting. And the goal of this study is to look for ways to try to reduce that upfront side effect, that upfront grade III diarrhea that's seen with NERLYNX. In this study, patients are given neratinib over a year, which is where our market indication is. And we looked at various techniques upfront to try to reduce the side effects of the drug. This included using antidiarrheal drugs, as you can see on the slide, such as loperamide as well as other agents as well. On this slide, you can see what we did was there were sequential cohorts, where the first cohort was just given Imodium alone, and they just took it mandatory for the first month or 2. Then we combined the Imodium with budesonide, then the Imodium with colestipol. And then the last cohort we did, we didn't do any antidiarrheal agents upfront, but instead, we did a dose escalation. And -- so basically, we're starting with about a half dose of the drug and then titrating up in the first couple of weeks. This is the result of it, and this compares the control trial to our original ExteNet trial. And as you can see, in our original ExteNet trial, you had 40% of the patients getting grade III or higher diarrhea. You had 17% of them having discontinuation due to the diarrhea and 26% of them needing a dose reduction due to the diarrhea. In each of the maneuvers that we did, we were able to reduce the grade III diarrhea. And as I mentioned, the dose escalation ended up showing the best results, which was a 13% grade III diarrhea. And only 3% of the patients, respectively, having diarrhea that led to a discontinuation or diarrhea that led to a dose reduction. The market for NERLYNX in the extended adjuvant HER2-positive breast cancer setting, it's about 28,300 patients in the U.S. with early-stage HER2-positive breast cancer. They get treated with adjuvant treatments and, hence, would be candidates for extended adjuvant. In the EU, that number is higher. It's 37,000. In the U.S., our label is both hormone receptor positive and hormone receptor negative patients. In the EU, it is only hormone receptor positive patients, and that's approximately 65% to 70% of the total EU market. Our more recent indication, which was last year, came from this trial, which was the NALA trial, which was in the third-line HER2-positive metastatic breast cancer setting. In this trial, we looked at patients who had received 2 or more prior lines of HER2-directed therapy. And we looked at neratinib plus capecitabine. Capecitabine is known -- also known as Xeloda, and it was neratinib plus capecitabine against lapatinib plus capecitabine. The co-primary endpoints were central progression-free survival and overall survival. And we had a number of secondary endpoints, as you can see on the screen, including one that I'll talk about in detail, which is the time to intervention for CNS mets. This is the results of the primary endpoint -- the co-primary endpoint, I should say. This is for the progression fee survival. As you can see, the trial hit its primary endpoint, which was a hazard ratio of 0.76, with a log rank p-value of 0.0059. As you can see, the curve separated quite nicely. Because the proportional hazard ratio was violated, we ended up prespecifying a restricted means analysis. And using that restricted means analysis, the mean PFS was 8.8 months in the neratinib arm and 6.6 months in the lapatinib arm with a p-value of 0.0003. For the overall survival, the trial did not hit its primary endpoint, and that was a hazard ratio of 0.88 with a log rank p-value of 0.2086 and the mean increase in overall survival was an improvement of 1.7 months in the neratinib arm. As I mentioned, we also had a secondary endpoint, which was the time to intervention for CNS metastasis. And what this specifically looked at is when the patients -- the patients entered the trial without having brain -- progressive brain mets. And when they got progressive brain mets, we looked at the various therapeutic interventions such as radiation, surgery and anticancer medications. As you can see, there was a lower incidence of this in the neratinib arm compared to the lapatinib arm. And that was reflective of a lower overall cumulative incidence of brain mets in the neratinib arm, which was 22.8% in the neratinib arm, 29.2% in the lapatinib arm. And that was a p-value of 0.043. We've seen this signal with neratinib before, the ability to prevent brain mets. We saw it in this trial. We also saw it in our ExteNET trial, and we did another trial known as Nefertiti, which was a front-line metastatic trial that we also saw this in. In the third-line setting, about 6,400 patients in the U.S. have third-line HER2-positive metastatic breast cancer and about 4,700 have fourth-line HER2-positive metastatic breast cancer. We also have an ongoing study known as the FB-10 study, and this is a Phase I/II dose-ranging study, combining neratinib with Kadcyla. The original Kadcyla approval, which was just based on the EMILIA study, was in patients that had not had prior pertuzumab. Data later came out showing that efficients have been treated with pertuzumab, the response to T-DM1 was much lower. So in this trial, we mandated that patients had to have prior treatment with Perjeta, which is known as pertuzumab. We presented this data at ASCO about 2 years ago, and the ORR in this trial was about 60%. That's much higher than what was seen in the EMILIA study and much higher than what was reported in the patients that were previously treated with pertuzumab and treated with Kadcyla. We're expecting that this will be updated potentially sometime this year. So we look forward to seeing further results from this trial. There's also an ongoing study known as TBCRC 022. This has been a trial that's been expanded multiple times, originally just one cohort. And as you can see on the slide, it's been expanded many times. I'll go over the data that has been previously reported in the cohort 3, which was combining neratinib with capecitabine. We also have an ongoing study, which is cohort 4, combining it with T-DM1. This trial is specifically looking at patients with HER2-positive breast cancer that have progressive brain mets. And the arm that we're expecting to see data from later this year is the arm 4c, which is patients who have progressive brain mets CNS disease and have been previously treated with T-DM1. So these patients will be getting neratinib with T-DM1, and we look forward to seeing that data later this year. Cohort 3, which was looking at patients with progressive brain mets treated with neratinib plus capecitabine, which is Xeloda, has been previously reported. And this showed a CNS response rate of 49%. We are very pleased to see the waterfall plot on the screen. Based on this data, neratinib is actually in the NCCN guidelines for treating brain mets, and this is the neratinib-capecitabine combination based on the data I just showed you from TBCRC 022. Neratinib is also in the NCCN guidelines for preventing brain mets, and this is on the Nefertiti data that I mentioned earlier, which showed the prevention of brain mets in patients with HER2-positive metastatic breast cancer. We're also looking at neratinib in a basket trial. This is a tumor-agnostic trial where patients either have exon 18 mutations or HER2 mutations. And the 3 that I want to discuss in more detail is the exon 18-mutated lung, the HER2-mutated cervical and the HR-positive breast that's HER2-mutated. So to first talk about the hormone receptor positive breast cohort. In ER-positive breast, about 7% to 9% of them have estrogen receptor positive breast cancer. This tends to be mutually exclusive of the HER2 applications. So these tend to be HER2-negative patients, but they have a HER2 mutation. We first did this trial looking at neratinib alone. And what we found was that there was crosstalk that occurred between the estrogen receptor and the HER2 mutation. And basically, when we were suppressing the mutation, the ER -- the estrogen receptor, was upregulated. So due to that, we modified the trial to add fulvestrant to the trials so we were blocking both the ER as well as the HER2 mutation. When we did that, we were finding that we were getting good responses, but they were of much shorter duration than we were hoping for. And we then saw that the tumor was then amplifying itself, so it was switching from being HER2-negative to HER2-positive as a mechanism of resistance to the neratinib plus fulvestrant. So we, therefore, modified the trial to make it neratinib plus trastuzumab, which is Herceptin, plus fulvestrant. The data on this has been very well published. The neratinib monotherapy data was first published in Nature. And then the specific data in HR-positive breast was -- and with fulvestrant was published in Cancer Discovery in 2019. And then more recently, the neratinib plus Herceptin plus fulvestrant was shown at the San Antonio Breast Cancer meeting in last December. So this is the data on the neratinib plus Herceptin plus fulvestrant. As you can see, we saw a very nice waterfall plot with very nice tumor regressions. We're very pleased that we are able to see regressions based on the different histologies, based on the different mutations. But also, we saw them both in patients with prior fulvestrant and with prior CDK4/6. This is the swimmer plot. As you can see, the durations were quite nice and very large number of these patients with ongoing as well. So we have met with the FDA in October 2019. The FDA recommended that in order to look for an accelerated approval path, the first step we needed to do was to do a randomized trial, as you can see on the screen, in one arm, doing neratinib plus fulvestrant plus -- neratinib plus trastuzumab plus fulvestrant, in one fulvestrant plus Herceptin, and the other one fulvestrant alone. It's set up as a Simon 2-stage design. So you enroll 7 patients. If you don't see a response, you shut down the arm. If you do, expand the cohort to 18. The reason for this is that the FDA wanted us to be able to isolate the contribution of neratinib to the data that I just showed you. We're scheduled to have this trial fully enrolled very shortly. I would expect it probably in the next month or so. After which we'll be able to get the initial response data and then schedule our pre-NDA meeting with the FDA once we have that data. To next talk about the SUMMIT cervical cancer cohort. About 5% of cervical cancers have a HER2 mutation. This was the data that was published in Gynecological Oncology last year and was also presented at the SGO Annual Meeting. As you can see, we saw a very nice waterfall plot with a good response rate. This is the swimmer plot, if I remember this directly, the PFS was somewhere around 7, 7.5 months, so very good durations as well. Our plan here is to continue enrollment in this trial. And because it's a monotherapy arm, we would be looking to file for an accelerated approval once we got enough data. To next talk about the exon 18 lung. So exon 18 mutations happen at about 5% of the eGFR mutations in lung cancer. As you can see on the screen, the preclinical data shows that neratinib is very active in exon 18 mutations. We first had seen this signal in a trial that was previously done in 2010, which was an all-comers lung cancer trial. And as you can see, the main patients that responded were the ones that had exon 18 mutations and specifically the G719X mutation. So in the SUMMIT study, we enrolled a total of 11 patients. You'll notice we highlight the 10 that had a prior tyrosine kinase inhibitor. Exon 18-mutated lung cancer tends to be responsive to the eGFR TKIs in the frontline setting. This would include the newer ones like osimertinib and afatinib, but also the first generation ones, like erlotinib and gefitinib. So we specifically looked at patients who had already failed those drugs. And as you can see on the screen, this is the percentage of patients that failed them. What we found was in the 10 patients that had previously been treated with a TKI, we showed a 40% response rate, a duration of response of 7.5 months and a PFS of 9.1 months. Here, you can see the the waterfall plot on the right and the swimmer plot on the left. We are very pleased that we were able to see good durations here. But also that we were able to see activity regardless of whether there was a single mutation or a more complex mutation. From a side effect perspective, we did not see any incidents of grade III diarrhea, which is normally seen with neratinib in the study. We did see grade I and grade II. And to look at that in more detail, you'll notice there was no cases of grade III diarrhea, there was one case of grade II, and the rest was grade I. So we are very pleased that in this cohort, we were not able to see the grade III diarrhea that is normally seen with neratinib. So to put this data into perspective, as I mentioned, first-line, these patients tend to be responsive to EGFR TKIs. You can see this is data with afatinib. That's the only drug that actually has the exon 18 mutation in its label. And you can see that in that trial, there was a 63% response rate. In TKI pretreated patients, that response rate dropped dramatically, and that was only a 10.5% response rate. So clearly it's a cross-trial comparison, which obviously has its challenges, but our data with neratinib compares very favorably to the data with afatinib. So the success criteria has been met for both the first and the second stage of the Simon 2-stage. We're currently enrolling the second stage up to a total of 30 patients. We'll have an additional presentation on this data later this year and we're looking to schedule a meeting with the FDA to discuss a potential accelerated approval strategy. Once we get enough data, which we're hoping to be able to do later in 2021. We also have a number of ongoing ISTs, as you can see on the screen. These tend to be in a lot of other tumors, like colon cancer and glioblastoma, a few ongoing in breast and in other tumor types as well. We're hopeful that we might see some data from these later this year. And when we do, we'll be very pleased to announce those 2 investors. So in terms of the expected milestones for the company, we're looking to complete enrollment in the randomized Phase II in HR -- in SUMMIT in HR-positive breast in the second quarter of 2021. We'll have the top line data from that sometime later this year. We'll be reporting the Phase II data from the exon 18-mutated lung in the second half of the year. We're looking to conduct a pre-NDA meeting with the FDA to discuss an accelerated approval strategy for the HR-positive breast and the HER2-mutated cervical sometime this year. We're looking to have data from the TBCRC 022 trial on the combination of Kadcyla and neratinib in the second half of the year. And then as I mentioned, looking to have a meeting with the FDA with regard to an accelerated approval path for the exon 18 lung in 2021 as well. From an IP perspective, the composition of [indiscernible] issued goes out to 2025. We just recently received the Hatch-Waxman exclusivity on that. So they'll take that out to 2030. We have a number of other patents as well, including use in the treatment of cancer and then a specific one on our combination with capecitabine, which was our NALA approval, that goes out to 2031, and use in our first indication, the extended adjuvant breast that goes out to 2030. We also have IP on a related area, which is the EGFR T790M area. And that includes issued patents in the U.S. as well as in Europe, Asia and Australia. The patent claims were originally challenged back in 2011. They were upheld in a European opposition hearing in 2014. That was appealed, and they were upheld after that in December of 2020. While we aren't currently looking at studying neratinib in EGFR T790M mutations, we do recognize that there are a number of marketed drugs as well as those in development that are targeting this area, and this might open up a potential licensing opportunity for the company. From a management perspective, I act as CEO and President of the company; Dr. Richard Bryce as our Chief Medical and Scientific Officer; Jeff Ludwig, our Chief Commercial Officer; Maximo Nougues, our Chief Financial Officer; and Doug Hunt, our Senior Vice President of Regulatory affairs. As you can see on this slide, we have the Board of Directors. I'm very pleased to have a Board that spans both the commercial setting as well as the financial and the R&D and regulatory as well. From a financial perspective, we currently trade on the NASDAQ under the ticker PBYI. Our cash and cash equivalents at the end of December was $93 million. Earlier this year, we announced a licensing deal, which was licensing the Chinese rights to the drug to our partner, Pierre Fabre. That included an additional $30 million payment. So that obviously has a positive impact on our cash balance. Our cash burn in the fourth quarter was $15.6 million, however, that included a onetime payment of around $10 million, which means kind of the ongoing operating burn was closer to $5 million or $5.5 million. We also have a loan outstanding with Oxford Finance for about $100 million. And our shares issued and outstanding is 40.2 million. So just to close with the company highlights. NERLYNX is the first HER2-positive-directed drug approved by the FDA for the extended adjuvant treatment of early stage HER2-positive breast cancer in patients who've received prior to trastuzumab. It's also the first HER2-directed kinase -- tyrosinase inhibitor approved both early stage and metastatic. We've got a good initial indication in the U.S. and other countries and a lot of additional potential indications, like HER2 metastatic breast cancer that spread to the brain; HER2-mutated breast; HER2-mutated cervical; EGFR exon 18-mutated lung; and other HER2-mutated solid tumors. I'd like to thank the investors for watching this presentation. And of course, thank Barclays for allowing us to present.

Thank you, Alan. So maybe I'd just ask 2 questions. I think that you have lots of ongoing clinical trials, and then some of them are very impressive data. So regarding the EGFR exon 18, you did show very impressive response rate. So what is your thoughts on, in terms of a pivotal trial, a number of the patients that will be sufficient for accelerated approval? And then what kind of bar you think there will be for the response rate?

Yes. So thank you for the question. So you have 2 questions. One is what's the size of the trial that would be necessary, and one is what is the bar. I don't know the answer to either of those because we haven't spoken to the FDA. So I really can't answer those to any degree of accuracy. I'm certainly aware that there are other rare mutations in lung cancer that have gotten their first approval using 50 or 100 patients or so. And this could be things like the ROS1 or the RETs and things like that. Now this is a supplemental approval. Neratinib has already been approved twice. I don't know if that lowers the number of patients we need because of totality of the data. I don't know the answer to that until we talk to FDA. I certainly can't answer the bar that's needed, if you will, either. Certainly, the only drug that has ever shown data in patients who have been previously treated with a TKI is afatinib, which is FDA-approved and has the exon 18 in the label. That's a 10.5% response rate. So our 40% compares very favorably. But I don't know the definitive answer to either of those questions until we have a conversion with the FDA on that topic.

That's clear. And then my last question is, how do you think about Puma beyond NERLYNX?

Yes. Well, we -- right now, we're about a cash flow neutral company. And obviously, with sales increasing and our royalties ex U.S. increasing, we're looking to turn into a cash flow positive company. And I would say the number one thing we hear from our investors is they'd like to see us bring in an additional asset. So I think there's the opportunity to do that. Obviously, we're very selective in what we look to bring in being a small company. But I think diversifying the company by bringing in additional assets is something that would definitely be of interest to us as long as it's the right asset.

Okay. Well, thank you very much, and look forward to very -- hopefully, very productive 2021.

Great. Thank you.

Thank you.