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

Good afternoon. My name is Darryl, and I will be your conference call operator today. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the conference call over to Mariann Ohanesian, Senior Director of IR for Puma Biotechnology. You may begin your conference.

Thank you, Darryl. Good afternoon, and welcome to Puma's conference call to discuss our earnings results for the second quarter of 2026. Joining me on the call today are Alan Auerbach, Chief Executive Officer, President and Chairman of the Board of Puma Biotechnology; Maximo Nougues, Chief Financial Officer; Heather Blaber, Senior Vice President of Marketing; and Roger Storms, Senior Vice President of Sales. After the close today, Puma issued a news release detailing earnings results for the second quarter of 2026. That news release, the slides that Roger will refer to and a webcast of this call are accessible via the homepage and Investors section of our website at pumabiotechnology.com. The webcast and presentation slides will be archived on our website and available for replay for the next 90 days. Today's conference call will include statements about Puma's future expectations, plans and prospects that constitute forward-looking statements for purposes of federal securities laws. Such statements are subject to risks and uncertainties, and actual events and results may differ from those expressed in these forward-looking statements. For a full discussion of these risks and uncertainties, please review our periodic and current reports filed with the SEC from time to time, including our annual report on Form 10-K for the year ended December 31, 2025. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this live conference call, August 6, 2026. Puma undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as required by law. During today's call, we may refer to certain non-GAAP financial measures that involve adjustments to our GAAP figures. We believe these non-GAAP metrics may be useful to investors as a supplement to, but not a substitute for, our GAAP financial measures. Please refer to our second quarter 2026 earnings release for a reconciliation of our GAAP to non-GAAP results. I will now turn the call over to Alan.

Thank you, Mariann, and thank you all for joining our call today. Today, Puma reported total revenue for the second quarter of 2026 of $56.5 million. Total revenue includes product revenue net, which consists entirely of NERLYNX sales as well as royalties from our sublicensees. Product revenue net was $53.6 million in the second quarter of 2026, an increase from $42 million reported in Q1 of 2026 and $49.2 million reported in Q2 of 2025. As a reminder to investors, Puma's reported NERLYNX sales includes both U.S. net sales of NERLYNX and product supply revenues of NERLYNX to Puma's ex-U.S. partners. Product revenue for the second quarter of 2026 included approximately $1.3 million (sic) [ $1 million ] of inventory drawdown at our specialty pharmacies and specialty distributors. Royalty revenue was $2.9 million in the second quarter of 2026 compared to $2.8 million in Q1 2026 and $3.2 million in Q2 of 2025. We reported 2,929 bottles of NERLYNX sold in the second quarter of 2026 compared to 2,328 bottles sold in Q1 of '26. In Q2 2026, we estimate that inventory decreased by 57 bottles. In Q2 2026, new prescriptions were down approximately 6% compared to Q1 2026, and total prescriptions were up approximately 7% compared to Q1 2026. Roger will provide further details in his comments and slides. I will now provide updates from Puma's ongoing Phase II trials of alisertib in small cell lung cancer and HER2-negative ER-positive breast cancer, also referred to as ALISCA-Lung1 and ALISCA-Breast1. Heather Blaber and Roger Storms will add additional color on NERLYNX commercial activities. Maximo Nougues will follow with highlights of the key components of our financial statements for the second quarter of 2026. As investors are aware, Puma has 2 ongoing Phase II trials of our investigational drug, alisertib, ALISCA-Breast1, which is a Phase II trial of alisertib in combination with endocrine therapy in patients with HER2-negative hormone receptor positive, recurrent or metastatic breast cancer; and ALISCA-Lung1, a Phase II study looking at the efficacy of alisertib monotherapy in patients with small cell lung cancer. As a reminder, the ALISCA-Breast1 trial investigates alisertib in combination with endocrine treatment consisting of either anastrozole, exemestane, letrozole, fulvestrant or tamoxifen in patients with HER2-negative hormone receptor positive recurrent or metastatic breast cancer. Patients must be chemotherapy naive in the recurrent or metastatic setting, have had previous treatment with a CDK4/6 inhibitor and have received at least 2 prior lines of endocrine therapy in the recurrent or metastatic setting to be eligible for the trial. Patients were initially being dosed with alisertib given at either 30 milligrams, 40 milligrams or 50 milligrams twice daily BID on days 1 to 3, 8 to 10 and 15 to 17 on a 28-day cycle in combination with endocrine therapy at the -- of the investigator's choice. Patients must not have been previously treated with the endocrine treatment in the metastatic setting that will be given in combination with alisertib in the trial. Interim data from this trial was presented on the company's first quarter conference call. As discussed during that presentation, the company believes that the data obtained to date from ALISCA-Breast1 is providing a preliminary indication of potentially better activity in patients with biomarkers where the Aurora kinase pathway plays a role. Based on the feedback that we have received from breast cancer key opinion leaders on this interim data, the trial has been amended such that now we are only continuing enrollment in the 40-milligram and 50-milligram dose groups. That amendment to the protocol has been submitted to the FDA and the EU authorities and is being submitted to the IRBs as well. We are hoping to begin enrollment under that amended protocol in Q3. We will also be updating interim data from the ALISCA-Lung1 trial, including longer-term patient follow-up in the fourth quarter of this year. With respect to the ALISCA-Lung1 study, as investors are aware, Puma has an ongoing Phase II trial of our investigational drug alisertib, to investigate the efficacy of alisertib monotherapy in patients with small cell lung cancer. Interim data from this trial was presented on the company's first quarter earnings call. As discussed during the presentation, the company believes that the data obtained to date from ALISCA-Lung1 is providing a preliminary indication of potentially better activity in patients with the biomarkers where the Aurora kinase pathway is playing a role. As was also discussed on that call, the company previously amended the trial to increase the dose from 50 milligrams BID to 60 milligrams BID. Dosing of the trial was further increased to 70 milligrams BID, and the company is currently enrolling patients at the 70-milligram BID level. There are currently 92 patients in the trial with 36 of the patients enrolled at the 60-milligram BID dose and 4 patients enrolled at the 70-milligram dose. As was also mentioned on the recent earnings call, Puma also plans to initiate a second trial of alisertib in small cell lung cancer, ALISCA-Lung2, where the drug will be given in combination with paclitaxel similar to the Phase II randomized trial that was previously published in the Journal of Thoracic Oncology. The company anticipates that enrollment in the ALISCA-Lung2 trial will start in Q3, and the company will provide investors with further information on this trial in the future. The company anticipates that we will have additional interim data from ALISCA-Lung1 and the initial data for ALISCA-Lung2 in 2027. As mentioned on prior earnings calls and in response to investor questions, Puma continues to evaluate several commercial stage and development stage drugs to potentially in-license or acquire that would allow the company to diversify itself and leverage Puma's existing R&D, regulatory and commercial infrastructure. The company will keep investors updated on this as it progresses. I will now turn the call over to Heather Blaber for an update on our marketing initiatives. Roger Storms will follow with a review of our commercial performance during the quarter.

Thanks, Alan. I appreciate the opportunity to share some additional insights into our marketing strategy. The marketing team is focused on continued awareness of both clinical data for NERLYNX as well as reinforcing the continued unmet need in HER2-positive early-stage breast cancer after adjuvant therapy. We continue to invest in market research to help us understand and validate the most effective ways to communicate our data with health care professionals through both personal and nonpersonal promotion. Our strategy is focused on increasing awareness of our dual indication in HER2-positive breast cancer. We believe NERLYNX plays an important role in the early stage by reducing the risk of recurrence and in the metastatic setting by helping protect against progression. Not only do physicians who have experience with NERLYNX continue to identify appropriate patients that could benefit from additional therapy post-adjuvant treatment, but we continue to adopt new prescribers year-over-year who recognize the unmet need in HER2-positive early-stage breast cancer and how NERLYNX may help their patients reduce their risk of recurrence. In summary, we are excited and committed to engage with more oncologists and support their patients diagnosed with HER2-positive breast cancer in both the early and metastatic setting. I will now turn the call over to Roger Storms to provide an overview on the commercial performance for the second quarter.

Thank you, Heather, and thanks to everyone for joining our second quarter earnings call. Before I move into the commercial review, just a reminder that I'll be making forward-looking statements. The sales team remains focused on increasing the use of NERLYNX with a main focus on patients at higher risk of recurrence. They are also dedicated to enhancing clinical education and engagement through nonpersonal promotional efforts as well as utilizing patient resources to support persistence and compliance during NERLYNX therapy. Let me now transition to some of the commercial slides where I'll provide some additional specifics around performance. Slide 3 is an illustration of our distribution model, which is broken out into the specialty pharmacy channel and the specialty distributor or in-office dispensing channel. Regarding the overall distribution of our business, in Q2 2026, about 61% of our business was purchased through the SP channel, and the remaining 39% was purchased through the SD channel. We continue to see stronger growth in the SD channel driven by 2 main factors: increased sales in the group purchasing organizations, or GPO segment and increasing 340B purchasing. Turning to Slide 4. NERLYNX net product revenue in Q2 2026 was $53.6 million, an increase from the $42 million we reported in Q1 2026 and the $49.2 million we reported in Q2 of 2025. As a reminder to investors, Puma's reported NERLYNX sales include both U.S. net sales of NERLYNX and product supply revenues of NERLYNX to Puma's ex-U.S. partners. Please note that in Q2 2026, we reported minimal product supply revenue to our international partners versus about $100,000 in Q1 of 2026. I will provide some more details around inventory changes, and Maximo will provide some additional specifics around gross to net expenses during his update. In Q2 2026, we estimate that inventory decreased by about $1 million. As a comparator, we estimate that inventory decreased by about $7.9 million in Q1 of 2026. Slide 5 shows Q2 2026 ex-factory bottle sales and also provides both a year-over-year and a quarter-over-quarter comparison. As a reminder, ex-factory bottles include sales to our SP and SD channels. In Q2 2026, NERLYNX ex-factory bottle sales were 2,929, which represents an approximate 26% increase quarter-over-quarter and 12% increase year-over-year. Let me specifically call out the inventory changes from a bottle perspective. In Q2 2026, we estimate that inventory decreased by 57 bottles. As a comparator, we estimate that inventory decreased by 439 bottles in Q1 of 2026 and decreased by 85 bottles in Q2 of 2025. Slide 6 highlights our commercial demand for the quarter. In Q2 2026, U.S. demand was 2,986 bottles, which represents an approximate 8% increase quarter-over-quarter and 11% increase year-over-year. As mentioned earlier, we have seen stronger growth in the SD channel where we saw demand grow by about 12% quarter-over-quarter and 32% year-over-year. The year-over-year and quarter-over-quarter increases are a direct result of continued emphasis put on executional excellence and increased field accountability. Our Q2 2026 call activity increased 18% year-over-year and 2% quarter-over-quarter, and total prescriptions or TRx increased by 7% quarter-over-quarter and 3% year-over-year. Enrollments in the quarter grew 1% quarter-over-quarter and 12% year-over-year. Commercial new patient starts in the quarter declined 6% quarter-over-quarter and grew 8% year-over-year. Continued messaging and adoption of dose escalation remains an important commercial priority, and 73% of patients started NERLYNX at a reduced dose. We believe dose escalation, coupled with patient education resources will give patients better support throughout their NERLYNX therapy and ultimately help them reduce the risk of recurrence. Slide 7 highlights the strategic collaborations we formed across the globe. Most recently, in Q1 2026, NERLYNX was launched in Thailand, also in the extended adjuvant setting. We really appreciate the excellent work being done by our partners around the world and look forward to supporting their continued success moving forward. I'll close by sharing my sincere appreciation for the entire Puma team and their steadfast commitment to supporting patients and families affected by breast cancer. This disease is truly devastating. And while meaningful progress has been made, we know there is still important work ahead and even more we can accomplish together. I will now turn the call over to Maximo for a review of our financial results.

Thanks, Roger. I will begin with a brief summary of our financial results for the second quarter of 2026. Please note that I will make comparisons to Q1 2026, which we believe is a better indication of our progress as a commercial company and year-over-year comparisons. For more information, I recommend that you refer to our second quarter 2026 10-Q, which will be filed today and includes our consolidated financial statements. For the second quarter of 2026, we reported net income based on GAAP of $8.2 million or $0.16 per diluted share. This compares to a net loss in Q1 2026 of $3.8 million or $0.07 per share. On a non-GAAP basis, which is adjusted to remove the impact of stock-based compensation expense, we reported net income of $10.1 million or $0.20 per basic share and $0.19 per diluted share for the second quarter of 2026. Gross revenue from NERLYNX sales was $74.3 million in Q2 2026 and $57.5 million in Q1 2026. As Alan mentioned, net product revenue from NERLYNX sales was $53.6 million, an increase from the $42 million reported in Q1 2026 and the $49.2 million reported in Q2 2025. As a reminder to investors, Puma reported NERLYNX sales include both U.S. net sales of NERLYNX and product supply revenue of NERLYNX to Puma ex-U.S. partners. Please note that in Q2 2026, we reported product supply revenue to our international partners of around $23,000. Therefore, U.S. net sales of NERLYNX in Q2 2026 were $53.6 million versus $41.9 million in Q1 2026. The increase in net product revenue in Q2 2026 versus Q1 2026 was driven by higher demand, inventory decrease in Q2 of about $1.3 million (sic) [ $1 million ] versus inventory decrease of $7.9 million in Q1 2026, offset by a higher gross to net in Q2. Royalty revenue totaled $2.9 million in the second quarter of 2026 compared to $2.9 million in Q1 2026. Our gross to net adjustment in Q2 2026 was about 27.9% and 27% in Q1 2026. The high gross to net adjustment was driven by higher Medicaid share. Cost of sales for Q2 2026 was $12.5 million and includes $2.4 million for the amortization of intangible assets related to our neratinib license. Cost of sales for Q1 2026 was $10.4 million. Going forward, we will continue to recognize amortization of milestones to the license or about $2.4 million per quarter as cost of sales. For fiscal year 2026, Puma anticipates that net NERLYNX product revenue will be in the range of $205 million to $209 million, higher than our prior guidance of $202 million to $206 million. We also anticipate that our gross to net adjustment for the full year 2026 will be between 26.5% and 27.5%. In addition, for fiscal year 2026, we anticipate receiving royalties from our partners around the world in the range of $19 million to $22 million, slightly lower than our prior guidance of $20 million to $23 million. Under our sublicense agreement covering China, the royalty rate payable to us is subject to reduction when the market share of generic versions of NERLYNX in China reaches a specific threshold. We are unable to predict with certainty when this threshold will be reached. However, we believe it is possible that the threshold could be reached, triggering the royalty rate reduction in late 2026 or in 2027. We don't expect any license revenue in 2026. We also expect that net income for the full year will be in the range of $17 million to $20 million, also higher than our prior guidance of $16 million to $19 million. The current guidance does not include any potential release of any additional tax asset valuation allowance in our net income estimate. The company is reviewing its deferred tax assets as part of its ongoing tax valuation analysis and has not yet determined whether any adjustment will be required or if so, the potential timing or size of such an adjustment. We will continue to keep investors updated on this as it progresses. At this time, we do not believe that the tariffs imposed or proposed to be imposed by the United States, particularly with other countries, will have a material impact on our product costs or results of operations. However, shift in trade policies in the United States and other countries have been rapidly evolving and are difficult to predict. As a point of reference, our manufacturing product cost accounts for a mid- to high single-digit percentage of our total cost of goods sold. We anticipate that for Q3 2026, NERLYNX product revenue net will be in the range of $54 million to $56 million. We expect Q3 royalty revenues will be in the share in the range of $2 million to $3 million and no license revenue. We further estimate that the gross to net adjustment in Q3 2026 will be approximately 26% to 27%. Puma anticipates a Q3 net income between $2 million and $2.5 million. SG&A expenses were $17.5 million in the second quarter of 2026 compared to $18.4 million in the first quarter of 2026. SG&A expenses included noncash charges for stock-based compensation of $1.2 million for Q2 2026 and $1.1 million for Q1 2026. Research and development expenses were $18.9 million in the second quarter of 2026 and $19.8 million in Q1 2026. R&D expenses included noncash charges for stock-based compensation of $0.8 million (sic) [ $0.7 million ] in Q2 2026 and $0.8 million in Q1 2026. On the expense side, Puma anticipates higher total operating expenses in 2026 compared to 2025. More specifically, we anticipate SG&A expenses to increase by 1% to 2% and R&D expenses to increase by 34% to 37% year-over-year. The higher increase in R&D is driven by the progress of our clinical trials. In the second quarter of 2026, Puma reported cash burn of approximately $9.7 million. This compares to cash burn of approximately $4 million in Q1. Please note that during Q2 2026, we made our final quarterly principal loan payment of $11.1 million related to our obligation with Athyrium. As a result, Puma now is debt-free. At June 30, 2026, we had approximately $93.9 million in cash, cash equivalents and marketable securities versus $97.5 million at year-end 2025. Our accounts receivable balance was $34.1 million. Our accounts receivable terms range between 10 and 68 days, while our days sales outstandings are about 44 days. We estimate that as of June 30, 2026, our distribution network maintained approximately 3 weeks of inventory. Overall, we continue to deploy our financial resources to focus on the commercialization of NERLYNX, the development of alisertib and controlling our expenses.

Thanks, Maximo. On past earnings calls, we have stressed that Puma's senior management in cooperation with the Board of Directors continues to remain focused on NERLYNX sales trends and recognizes its fiscal responsibility to shareholders to continue to maintain a positive net income. We believe that this focus has contributed to our commercial execution thus far in 2026. According to our current projections, 2026 will mark the second year-over-year demand increase for NERLYNX in the United States and the first time in the history of the launch of NERLYNX in the United States that we have seen 2 positive consecutive year-over-year increases in demand. We are pleased to report this demand-driven increase in NERLYNX sales in the second quarter of 2026, and we believe that the positive net income that the company is guiding to for full year 2026 has resulted from both this increased demand as well as the continued financial discipline across the company over the last few years. The company remains committed to continuing to achieve this positive net income and we will continue to reduce expenses if needed to achieve this. We look forward to updating investors on this in the future. There continues to remain a significant unmet need for patients battling breast cancer, lung cancer and other solid tumors. We at Puma are committed and passionate about finding more effective ways at helping these patients during their journey, and we will continue to strive to achieve that goal. This concludes today's presentation. We will now turn the floor back to the operator for Q&A. Operator?

[Operator Instructions] Our first questions come from the line of Marc Frahm with TD Cowen.