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

Good afternoon, everyone. This is Sahil Kazmi, research analyst, here as part of the Health Care Equity Research Team at B. Riley. I'd like to thank everyone for staying with us here at day 2 of the B. Riley Virtual Oncology Conference. For our next presenter, it's my pleasure to introduce Alan Auerbach, President and CEO of Puma Biotechnology. Alan, please go ahead.

Great. Thank you very much. First of all, I'd like to remind everyone that I'll be making forward-looking statements. So on this slide, you can see our product pipeline, which consists of 2 drugs. Our first drug is neratinib, which is also known commercially as NERLYNX, and the drug is currently on the market in 2 indications: One is HER2-positive early breast cancer. And the second one is in metastatic Phase III -- I'm sorry, metastatic -- third-line HER2-positive metastatic breast cancer. We also have 2 ongoing trials that I'll go into in more detail, which is the TBC 022 study and the SUMMIT study. We also recently in-licensed another asset, alisertib, which is an Aurora kinase A inhibitor. And as you can see, we've got it in clinical trials in hormone receptor-positive, HER2-negative metastatic breast cancer, triple-negative breast cancer and small cell lung cancer. So to first talk about our commercial situation. Our drug, NERLYNX, is commercially available in the United States as well as other countries. In the U.S., we sell the drug ourselves, and we sell through 2 networks; one, we refer to as our Specialty Pharmacy Network. And this is where there's a physical prescription that's written and then the bottle is physically delivered to the patient by the pharmacy. The other is what we refer to as our Specialty Distribution Network. And this is where it's sent to the doctor's office and the patient gets the bottle actually at the patient's off -- at the doctor's office. On this slide, you can see our quarterly revenue for the drug since launch. And as you can see, this starts in Q3 of 2017 when the drug was approved. And most recently, in Q3 in 2022, we reported $54.3 million in sales of the drug, which was an increase from $51.3 million in Q2. On this slide, you can see the bottles sold by quarter. Again, we started in Q3 of 2017 when the drug was approved. And as you can see, most recently, we announced that in the fourth quarter of 2022, we sold 3,323 bottles, which was an increase from the 3,197 in Q3. The main side effect of neratinib -- of NERLYNX is that the drug can cause severe diarrhea -- grade 3 diarrhea in the first month or so that the patient is on it. We have looked at ways of reducing this, and that was in what we called our CONTROL trial. And the way that we found that, that was the most effective was to do what we refer to as a dose escalation, which is to start with a low dose of the drug and then titrate up in the first month to a full dose when the patient is on it. This in the CONTROL trial was very successful in reducing the incidence of the grade 3 diarrhea and also improving the tolerability of the drug. We had a number of physicians who were doing this on their own and then learning about it through various publications and presentations, but we weren't able to physically get it into our label until June of 2021. And as you can see on the slide, the slide shows the percent of prescriptions -- new prescriptions that are using a reduced dose of the drug. So -- hence using this dose escalation. And as you can see, in Q2 of 2021, which is when we got it approved, you then saw it jump up. And we've seen a continued adoption of this with the most recent being in Q3 of 2022, approximately 67.9% of the new prescriptions were using this. We are hopeful that this is going to improve tolerability and also lead to patients having a longer duration of treatment on the drug. As I mentioned, in the U.S., we sell the drug ourselves. Outside the United States, we have partners, and you can see those on the slide here. In Australia and Southeast Asia, Specialized Therapeutics is our partner; in Israel, Medison; in Canada, Knight Therapeutics; in Latin America, Pint Pharma; in Europe, the Middle, East as well as in China, Pierre Fabre is our partner; and then in South Korea, Bixink is our partner. And as you can see, we've launched in many countries with many more to come. So to talk about the market, the majority of NERLYNX' sales are in the extended adjuvant HER2-positive breast cancer segment. In the U.S., there's a total of approximately 28,300 patients with early-stage HER2-positive breast cancer, they get treated with adjuvant treatment and hence would be candidates for extended adjuvant treatment. According to the NCCN guidelines, it recommends that the drug be used in patients who are at a high risk of relapse and specifically those with hormone receptor positive-disease as that's where the data has shown our drug works best. That market is about 6,000 patients in the U.S. In Europe, our drug is only approved in hormone receptor positive patients and of the 37,000 patients with early-stage HER2-positive breast cancer in Europe, about 65% to 70% of them have HR-positive disease. As I mentioned, we have an ongoing study of neratinib, specifically in patients with HER2-positive breast cancer and brain mets. This is known as the TBCRC 022 trial. And as you can see, there's been a number of different cohorts that have been tested here. The third cohort, cohort 3 looked at neratinib with capecitabine in patients with brain mets, and I'll show you that data shortly. And then most recently at the San Antonio Breast Cancer Meeting, we showed data on neratinib with T-DM1, which is also known as Kadcyla in patients with brain mets as well. So this is the data on cohort 3a. These are the patients with capecitabine in combination with neratinib with brain mets. You can see the waterfall plot here on the slide. As you can see, we saw a very nice number of patients with tumor regressions and a CNS ORR of roughly 49%. I also mentioned that cohort 4 was looking at neratinib in combination with T-DM1. And here, you can see the various cohorts, the ones who were T-DM1-naive, the ones who were T-DM1 pretreated. And as you can see, we ended up seeing dramatic tumor shrinkage in the majority of these patients. Neratinib is actually included as a treatment option in the NCCN guidelines for breast cancer that's metastasized to the brain. And that's based on the cohort 3 I showed with the neratinib with capecitabine from TBCRC 022. We also had another study known as the NEfERT-T study, and this was looking at neratinib with paclitaxel, where we also saw an effect in brain mets, and that data is in the NCCN guidelines as well. We also are looking at neratinib in what we call our SUMMIT Basket trial, which is looking at various mutations, specifically looking at EGFR exon 18 mutations as well as HER2 mutations. There are 2 I'll talk about in more detail, and that is the HR-positive breast with HER2 mutations as well as the EGFR exon 18 lung mutations. First, to talk about the SUMMIT Breast Cancer Cohort. So these are the patients who have HR-positive disease are HER2-negative and have a HER2 mutation. We looked at this both in patients who -- originally we looked at just neratinib alone, then neratinib with fulvestrant and then neratinib with fulvestrant and trastuzumab. In order to isolate what the contribution of neratinib was to that triplet, we ended up looking at a 3-arm trial, 1 arm getting neratinib plus fulvestrant plus trastuzumab, 1 getting fulvestrant plus trastuzumab and 1 getting fulvestrant alone. You'll also notice on the slide on the right, we also looked at triple-negative breast cancer patients who had a HER2 mutation. And in those patients, we gave neratinib plus trastuzumab. In the patients who were HER2-negative and HR positive, as you can see, the patients treated with the triplet, the neratinib plus fulvestrant plus trastuzumab, we saw the majority of these patients seeing tumor regressions in a very dramatic waterfall plot. In the patients who got fulvestrant plus trastuzumab much less so and in the patients who got fulvestrant alone, very little tumor shrinkage. In the triple-negative breast patients, again, we are very pleased to see these type of tumor regressions. And as you can see on the slide, it's also marked by what type of histology they had as well as what other co-mutations they had. To now discuss the EGFR exon 18 lung, this data was recently presented at the AACR-NCI-EORTC meeting and this was the data on patients with EGFR exon 18 mutations in lung. As you can see, we saw very nice tumor shrinkages in these patients. This was treating with neratinib alone. And you can see the waterfall plot on the right of the slide. On the left, you can see the swimmer plot, and I can see a number of these responses had very good durations as well. To now move to alisertib. So we recently announced that we in-licensed the drug alisertib from Takeda. Alisertib is an Aurora kinase A inhibitor and prior to us licensing the drug, it has been very well characterized. Takeda had run about 22 company-sponsored trials, treating over 1,300 patients. There's been single agent activity seen in the drug in a number of different tumor types, including hormone receptor-positive breast cancer, triple-negative breast cancer, small cell lung cancer and head and neck cancer and a number of hematological malignancies as well. Aurora kinase A has shown a synthetic lethality with RB1 and more specifically in patients who have a loss of function mutation for RB1. As you can see, there tends to be an upregulation in aurora kinase activity. And that makes these tumors, which are the ones with RB1 mutations and specifically loss of function mutations, a potential target to go after with an Aurora kinase A inhibitor like alisertib. Also mechanistically, aurora kinase A and c-Myc tend to have a co-regulation of one another. More specifically, when c-Myc is elevated, you also see an Aurora kinase A elevation as well. And again, this makes patients with elevated levels of c-Myc, a potential target for an Aurora kinase A inhibitor. I'll now talk about the clinical experience with the drug in small cell lung cancer. So one of the trials that Takeda ran with the drug was a trial of alisertib monotherapy, and this was in a number of different solid tumors, including in this was small cell lung cancer. This was in patients that had undergone up to 2 prior chemotherapy regimens and alisertib was administered in a 21-day cycle at 50 mg twice daily for 7 days and a break of 14 days. As you can see on the right, there were 2 groups of patients, those with chemotherapy-sensitive relapse and those with chemotherapy resistant or refractory disease. The response rate seen was 19% in those that were chemosensitive with a duration of response of 3.1 months. And in the chemotherapy-resistant patients, a response rate of 25% with a duration of 4.3 months. On this slide, you can see the waterfall plot, the patients with chemotherapy-sensitive disease are seen in blue, those with refractory or resistant disease are seen in red. And as you can see, we saw a very nice tumor shrinkage given the single agent activity. From a side effect perspective, because of the fact that an aurora kinase A inhibitor is a cell cycle inhibitor. It's specifically acting at the G2/M phase. The main side effects one would expect would be the ones involved in the blood cells and specifically the neutropenia, the leukopenia, thrombocytopenia, et cetera, and anemia, and that's exactly what we've seen in the trial. All of these were seen to be very well managed and have continued to be sense. Looking at the side effect profile of the drug. Recently, the drug lurbinectedin was approved for small cell lung cancer. And as you can see, the side effect profile of alisertib that was seen in the study is very similar to that, that was seen with lurbinectedin, specifically with regard to neutropenia, anemia, leukopenia and thrombocytopenia. There was also a study that was run of alisertib, and this was a randomized Phase II trial of paclitaxel plus alisertib versus paclitaxel plus placebo in second-line small cell lung cancer. In the trial, alisertib was given at 40 milligrams BID for 3 weeks on days 1 to 3, 8 to 10 and 15 to 17 plus paclitaxel or placebo plus paclitaxel. As you can see, another point to bring up here is that there was a very extensive biomarker study that was done in this trial as well, including looking at patients with elevated levels of c-Myc and also genetic alterations in various mutations. And this is based on the prior preclinical work that I mentioned in terms of the interaction between Aurora kinase A and c-Myc as well as RB1. As you can see on the Kaplan-Meier plot on the left, using the corrected definition in terms of sensitive and relapse, the hazard ratio was 0.71 with a p value of 0.038. And on the right, the OS was -- hazard ratio was 0.79 with a p value of 0.21. As I mentioned, there was an extensive biomarker analysis done and specifically in patients with elevated levels of c-Myc due to the interaction between c-Myc and aurora kinase A. And indeed, in the patients with elevated levels of c-Myc the median PFS was seen to be 4.6 months in the paclitaxel-alisertib arm and 2.27 months in the paclitaxel-placebo arm. This resulted in a hazard ratio of 0.29. And as you can see the confidence intervals there, which suggests the p-value to be much less than 0.05. And you can see a very nice separation of the curves. Also what was looked at was patients that had genetic alterations and specifically in the cell cycle genes due to the mechanism of action of an Aurora kinase A inhibitor in the cell cycle. Specifically, the predefined analysis was patients with genetic alterations in cell cycle genes, CDK6, RBL1 and RBL2 as well as RB1. The majority of these patients had RB1 mutations. The others were present in very low frequency. As you can see on the Kaplan-Meier in the upper left-hand corner in patients with a mutated -- with the mutants, the RB1, RBL1, RBL2 or CDK6, the PFS was seemed to be statistically significant. PFS 3.68 months in the alisertib-paclitaxel arm, 1.8 months in the placebo-paclitaxel arm. Hazard ratio of 0.395 with a p-value of 0.0003. Also on the upper right, the overall survival Kaplan-Meier also was shown to be statistically significant for the patients with the mutations, hazard ratio of 0.427 and a p-value of 0.0008. On a side effect perspective, similar to what was seen with alisertib as a single agent, the main side effects that tended to be seen were those involved in the cell cycle, such as the neutropenia, the anemia, thrombocytopenia, et cetera. To now move to the studies of alisertib in breast cancer. So in the alisertib monotherapy study, and this was the one giving alisertib as a single agent in a 21-day cycle at 50 milligrams twice daily for 7 days followed by a break of 14 days. They looked at a number of different cohorts with breast cancer. This included hormone receptor-positive HER2-negative breast, HER2-positive breast and triple negative breast. Focusing on the patients with home-receptor positive HER2-negative breast cancer, the response rate seen was 23% with a duration of response of 4.2 months and a median PFS of 7.9 months. On this slide, you can see the waterfall plot. This is for all of the patients with breast cancer, the triple negative, the HR-positive/HER2-negative as well as the HER2 positive. The HR-positive/HER2-negative are seen in the light blue. And as you can see, the majority of these patients showed tumor regression. And based on the PFS data, this progression was indeed something that was sustained. Again, from a side effect perspective, similar to what was seen in small cell lung cancer, the main side effects seen were neutropenia, leukopenia, thrombocytopenia, et cetera, and that would be expected based on the mechanism of action of the drug. There was also a randomized Phase II trial that was done of alisertib, looking at alisertib plus fulvestrant versus alisertib alone. Here, the drug was given at 50 milligrams BID on days 1 to 3, 8 to 10 and 15 to 17 of a 28-day cycle. On the left, you can see the patient characteristics and most notably, all of these patients had failed prior fulvestrant. So this was looking at trying to retreat with fulvestrant after that. As you can see on the slide on the lower right, in both arms of the trial, the response rate was seen to be similar, 17.8 months for alisertib alone, 20% -- sorry, 17.8% for alisertib alone, 20% for alisertib plus fulvestrant, median PFS 5.6 months in the alisertib lone arm, 5.1 months in the alisertib plus fulvestrant arm. Again, all of these patients have failed prior fulvestrant. The literature does not suggest that a patient would respond again to fulvestrant. So these results are not unexpected. And they're quite encouraging given the state of these patients. From a safety perspective, again similar to what was seen before, the main side effects that tended to be seen were those involved in the cell cycle and specifically with the neutropenia. These are very similar to what we're seeing in the single-agent studies. Another trial that was done with the drug is a randomized Phase II, and this was paclitaxel plus alisertib versus paclitaxel alone. This was again in the ER-positive, HER2-negative patients. Here, alisertib was given at 40 milligrams twice daily on days 1 to 3, 8 to 10 and 15 to 17 of a 28-day cycle. As you can see on the Kaplan-Meier curve on the right-hand side, the median PFS in the alisertib arm was 10.2 months. In the paclitaxel alone arm, it was 7.1 months. This resulted in a hazard ratio of 0.56 with a p-value of 0.005. The OS was not statistically significant, but numerically advantageous for the paclitaxel-alisertib arm. The OS was seen to be 26.3 months in the paclitaxel-alisertib arm versus 25 months in the paclitaxel alone arm. A very interesting signal that was seen in this study was that in the patients that were pretreated with palbociclib, which is commercially known as IBRANCE, there was a much larger magnitude of benefit from a PFS perspective. The PFS in these patients was 13.9 months in the paclitaxel plus alisertib arm versus 5.6 months in the paclitaxel-alone arm. It's believed that one of the reasons for this might be that there are several known mechanisms for palbociclib and CDK4/6 resistance. And this includes RB1 loss and c-Myc upregulation. As was mentioned previously, both RB1 loss and c-Myc regulation rendered the tumor to be sensitive to an Aurora kinase inhibition. And both of these mechanisms have been seen in palbociclib-resistant HR-positive breast cancer cell lines. We believe this supports the role for alisertib in this setting, and we're looking to further study this in future clinical trials. So here you can see the summary of the efficacy of alisertib in metastatic breast cancer. And as you can see in the HR-positive/HER2-negative, you've seen a median PFS anywhere between 5.6 months and 7.9 months for alisertib alone. In the paclitaxel plus alisertib arm, it was 10.2 months in the randomized study versus 7.1%. And specifically, the much greater magnitude of benefit seen in the palbociclib-treated patients. Also in the study that was done of paclitaxel-alisertib, there was also a cohort that looked at triple-negative breast cancer. And in that study as well, there was advantage. The paclitaxel alisertib arm was 9.6 months, paclitaxel alone 5.7. So looking at the main side effect, which is the neutropenia seen with the drug. The neutropenia that has been seen with alisertib is very similar to the neutropenia that has been seen in other drugs that are commercially available for treating ER-positive breast cancer. As you can see, the neutropenia that's been seen with the drug, the grade 3/4 neutropenia and the febrile. The grade 3/4 tends to be in kind of the 42% to 59.5% range depending on other single agent or whether you're using it with chemo. The febrile tends to be in the low single-digit range. This is -- was the physician's choice chemotherapy that was used in one of the randomized trials. This is HALAVEN, which is a commercially available breast cancer drug. This is IBRANCE, which is palbociclib. And as you can see -- the ranges you're seeing are very similar to what we've seen with alisertib. We've noted in clinical trials that the neutropenia with alisertib tends to be cumulative and we believe there may be ways to reduce it by using prophylactic G-CSF. And that's what we will look to do in the future trials that will run of the drug. So from a clinical development standpoint, there are 2 areas that Puma is interested in developing alisertib. The first one is an HR-positive/HER2-negative breast cancer, and the second one is in small cell lung cancer. We are interested in the broader population, but more specifically in biomarker-directed subgroups, c-Myc amplified and RB1 deficient tumors as that's where the mechanism of action would suggest that the drug will be most efficacious. We plan to meet with the FDA in the first half of 2023 to discuss this plan further and discuss Project Optimus as well. So from a milestone perspective, we're looking to have additional data on the alisertib, fulvestrant study, the biomarker data, which we're expecting to be published sometime in the first half of 2023 and also biomarker data from the alisertib-paclitaxel study also in the first half of '23. There's also an ongoing investigator sponsored trial of alisertib plus pembro in head and neck cancer, which we're expecting in 2023 as well. As I mentioned, we'll be talking to the FDA about the development path for alisertib in HR-positive/HER2-negative breast as well as small cell breast -- I'm sorry, small cell lung in the first half of '23. And then also discuss with the FDA, the registration path for neratinib in HER2-mutated HR-positive breast as well as EGFR exon 18 lung. From a management perspective, I act as CEO and President of the company; Jeff Ludwig is our Commercial Officer; Maximo Nougues our Chief Financial Officer; Alvin Wong, our Chief Scientific Officer; and Doug Hunt, our Senior Vice President of Regulatory Affairs. On this slide, you can see the Board of Directors for the company. We're very pleased to have a Board that comprises such a wide skill set, including commercial, finance, drug development and regulatory. From a financial perspective, our stock currently trades on the NASDAQ under the ticker PBYI. Our cash and cash equivalents at the end of September was $78 million, our net loss was $0.4 million in Q3, and our cash earned in Q3 was $17.4 million. There were 2 private placements that positively affected our cash position during 2022. The first was one was in March 2022, which was approximately 3.6 million shares that were issued to me as well as Athyrium Capital Management and then another one in December 2022, which was approximately 568,000 shares issued to me. Our shares issued and outstanding is $46.3 million. So just to close with the company highlights. NERLYNX is the first drug that has been approved by the FDA for the extended adjuvant treatment of early-stage HER2-positive breast cancer in patients that have received prior trastuzumab. It's also the first drug approved -- tyrosine kinase inhibitor approved for both early stage and metastatic HER2-positive breast cancer. In the U.S., we retained the full commercial rights to the drug as we believe that's where the true value lies. And then we've recently in-licensed the drug alisertib, which has shown clinical activity in Phase II trials, in hormone receptor positive, HER2-negative breast, triple-negative breast and small cell lung cancer. And we've got the potential for novel biomarker-directed commercial opportunities with alisertib compared to the other marketed drugs and drugs in development. I would like to thank everyone for attending and thank B. Riley for allowing us to present at their Virtual Oncology Conference.

Excellent. Thank you so much Alan. That was a really helpful overview of the pipeline and it looks like 2023 is going to be quite the year for Puma. So maybe I can pose one question to you that came in. And you touched on this in the beginning of the presentation, but -- how are you thinking about the sales trajectory for NERLYNX from 2023 and beyond, now that physicians are getting a little bit more comfortable with the profile of the drug, the reduced dose, and managing the side effect profile while balancing the efficacy as well?

Yes, I think that in 2020 and 2021, we were definitely challenged commercially due to what was going on with the pandemic and offices were closed. It was difficult to -- for our sales force to interact with physicians and it, no question, caused a lot of challenges for us. In 2022, we definitely saw that things were opening up, and we were much more able to have our sales force interact with physicians and look, we believe that helped out and the numbers show this, helped out our sales trajectory. We're hopeful that, that trend will continue in 2023 and beyond. And that's what we would look to continue to do is continue that commercial execution and specifically continue with having our sales force interacting live with the oncology physicians.

Excellent. That's very helpful. And with that, we are coming out of time. So I want to thank Alan and the Puma team for participating in the conference today. I really appreciate your time.

Great. Thank you very much. Thank you for allowing us to present.

Absolutely.