Puma Biotechnology Inc (NASDAQ:PBYI) is an excellent example of the importance of a factor that many biotech investors don’t focus on enough: the support of the medical community. In other words, imagine we were talking about tools for auto mechanics. Let’s say, there is a gasket hose wrench (the Puma Wrench) that shows some remarkable score on an index of lab-reported gasket hose activity.
However, in practice, if we were to observe a sample of actual mechanics working on cars, we see that the mechanics are using a different wrench. If we ask some of them why this is the case, they tell us that the Puma Wrench causes blisters and strips the head of important nuts. So they prefer a different one that, while it doesn’t work quite as good, works good enough and doesn’t have the negatives attached.
Puma Biotechnology Inc (NASDAQ:PBYI) shares were killed to close out last week. The answer to the question of Why is a similar issue.
Just like we had to interview the auto mechanics in our hypothetical example on gasket hose wrench tools, we would have to talk to prescribing doctors and head clinicians to understand why Nerlynx sales reached just $52.6 million during the third quarter, just 3.5% higher than during the previous three months.
Whereas the mechanics would acknowledge the Puma Wrench’s fine qualities as a wrench, per se, but also complain of its side effects and therefore leave it in the toolbox while they use a different wrench, doctors have apparently acknowledged the strong anti-cancer properties of Nerlynx but opted to leave it in the toolbox in favor of other treatments because the drug apparently operates such that 40% of trial patients experienced diarrhea severe enough to require hospitalization.
While that did not forestall approval as a cancer drug, it has apparently forestalled doctors from recommending it as a primary treatment.
Given that shares of the stock have been trading up in anticipation of the sales boom from this anticipated potential blockbuster breast cancer drug, seeing the relatively low level of in-the-field adoption has dealt a serious blow to the confidence of investors.
According to the release, “Net product revenue in the third quarter of 2018 was $52.6 million, compared to net product revenue of $6.1 million in the third quarter of 2017. Puma Biotechnology received approval from the U.S. Food and Drug Administration (FDA) for NERLYNX® (neratinib) for the treatment of early stage HER2-positive breast cancer following adjuvant trastuzumab-based therapy on July 17, 2017, and the Company began shipment to wholesalers at the end of July 2017.”
The View From Above
Puma Biotechnology Inc (NASDAQ:PBYI) promulgates itself as a biopharmaceutical company that focuses on the development and commercialization of products to enhance cancer care in the United States.
Its drug candidates include PB272 neratinib (oral) for the treatment of early stage breast cancer, metastatic breast cancer, non-small cell lung cancer, HER2 mutation-positive solid tumors, and HER2-mutated non-amplified breast cancer; and PB272 neratinib (intravenous)).
The company also develops PB357, an orally administered agent that is an irreversible tyrosine kinase inhibitor that blocks signal transduction through the epidermal growth factor receptors, HER1, HER2, and HER4. It has a license agreement with Pfizer, Inc. for the development, manufacture, and commercialization of PB272 neratinib (oral), PB272 neratinib (intravenous), PB357, and certain related compounds.
Puma Biotechnology, Inc. was founded in 2010 and is headquartered in Los Angeles, California.
According to the release, “Puma Biotechnology, Inc. is a biopharmaceutical company with a focus on the development and commercialization of innovative products to enhance cancer care. Puma in-licenses the global development and commercialization rights to three drug candidates — PB272 (neratinib, oral), PB272 (neratinib, intravenous) and PB357. Neratinib, oral was approved by the U.S. Food and Drug Administration in July 2017 for the extended adjuvant treatment of adult patients with early stage HER2-overexpressed/amplified breast cancer, following adjuvant trastuzumab-based therapy, and is marketed in the United States as NERLYNX (neratinib) tablets. NERLYNX was granted marketing authorization by the European Commission for the extended adjuvant treatment of hormone receptor-positive HER2-positive early stage breast cancer in September 2018. NERLYNX is a registered trademark of Puma Biotechnology, Inc.”
“The third quarter of 2018 marked the achievement of another important milestone for Puma with the European Commission granting marketing authorization for NERLYNX for the extended adjuvant treatment of hormone receptor positive HER2-positive early stage breast cancer,” said Alan H. Auerbach, Chairman, Chief Executive Officer and President of Puma. “We expect this new medicine to be commercially available to patients in Europe in 2019, beginning with the expected launch in Germany during the first half of 2019 and followed by additional countries throughout Europe in the second half of 2019.”