Puma Biotechnology Inc

Good afternoon. My name is Alex, and I will be your conference call operator today. At this time, all participants are in a listen-only mode. After the speaker's formal remarks, there will be a question and answer session. If you'd like to ask a question during that time, simply press the star key, then the number 1 on your telephone keypad. If you'd like to withdraw your questions, please press star 2. If you should require operator assistance during the conference, please press star 0. As a reminder, this call is being recorded. I would now like to turn the conference call over to Marianne Ohannesson, Senior Director of IR for PUMA Biotechnology. You may begin your conference.

Thank you, Alex. Good afternoon and welcome to PUMA's conference call to discuss our financial results for the second quarter of 2022. Joining me on the call today are Alan Auerbach, Chief Executive Officer, President and Chairman of the Board of PUMA Biotechnology, Maximo Noguez, Chief Financial Officer, and Jeff Ludwig, Chief Commercial Officer. After market closed today, PUMA issued a news release detailing second quarter 2022 financial results. That news release, the slides that Jeff will refer to, and a webcast of this call are accessible via the homepage and investor sections 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 the company'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 Securities and Exchange Commission from time to time, including our annual report on Form 10-K for the year ended 12-31-21 and our quarterly report on Form 10-Q for the period ended June 30, 2022. 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 4, 2022. The company 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 also 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 2022 news release for a reconciliation of our GAAP to non-GAAP results. I will now turn the call over to Alan.

Thank you, Marianne, and thank you all for joining our call today. Today, PUMA reported total revenue for the second quarter of 2022 of $59.5 million. Total revenue includes product revenue net, which consists entirely of Neuralink sales, as well as license fees and royalties from our sub-licensees. Product revenue net was $51.3 million in the second quarter of 2022, which represents an increase as expected from the $40.7 million in product revenue net reported in the first quarter of 2022 and $48.9 million in product revenue net reported in Q2 2021. Product revenue for the second quarter of 2022 included approximately $2.7 million of inventory bill that our specialty pharmacies and specialty distributors. Royalty revenue was 8.2 million in the second quarter of 2022, an increase from 5 million in Q1 2022 and 4.3 million in Q2 2021. We recorded no license revenue in the latest quarter. We reported 3,200 bottles of Nearlinks sold in the second quarter of 2022, an increase of 520 from the 2,680 bottles sold in Q1 2022. We estimate that the Q2 inventory builds amounted to approximately 175 bottles. As noted on our last quarter call, we estimate that inventory stocking in late 2021 caused a reduction of approximately 282 bottles in Q1 2022. In Q2 2022, new prescriptions, NRX, were down approximately 8% compared to Q1, while total prescriptions, TRX, were up about 1.6%. Jeff will provide further details in his comments and slides. I will now provide a clinical review of the quarter, and then Jeff Ludwig will add additional color on Nearlink's commercial activities. Maximo Noguez will follow what highlights the key components of our financial statements for the second quarter of 2022. As we have mentioned on our prior calls, PUMA has an ongoing basket trial of neuratinib and HER2-mutated cancers referred to as the summit trial. The arm of the trial that has enrolled the most patients to date is the arm that is testing neuratinib in patients with hormone receptor positive, HER2-negative breast cancer who have a HER2 mutation, and as we have discussed on previous investor calls, PUMA has been looking to pursue a regulatory approval in this indication and more specifically for the triplet of neratinib plus trastuzumab plus fulvestrant for which clinical data was presented at the recent American Society of Clinical Oncology Annual Meeting in June. As investors are aware, at the American Society of Clinical Oncology Meeting in June, Data was presented on the HER2-targeted antibody drug conjugate in HER2 in patients with HER2-negative HR-positive metastatic breast cancer in a trial referred to as Destiny Breast 04 or DB04. This trial showed an improvement in progression tree survival and overall survival, and assuming that it is approved, we believe it is likely to become the new standard of care for patients with HER2-negative metastatic breast cancer. Based on the inclusion criteria for DbO4, we believe it is likely that the population of patients studied in DbO4 overlaps with that of summit for neratinib, an HR-positive HER2-negative, HER2-mutated breast cancer. While we do not know what percent of the patients in DbO4 had HER2 mutations, we acknowledge that an HER2 is a HER2-targeted agent and has shown activity in and is in the NCCN guidelines for other HER2-mutated tumors. Due to this, we believe that it is unlikely that the FDA would grant accelerated approval for neratinib based on the summit data and would instead inquire us to either, one, do a head-to-head trial against N-HER2 in the syndication, two, do a trial of the triplet in combination with N-HER2 versus N-HER2 monotherapy, or three, study neratinib in a HER2-mutated population that does not overlap with a DBO4 indication. We believe that the head-to-head trial against NHER2 is not in the best interest of shareholders, as the cost of this trial would be prohibited and the likelihood of success would be low. The trial of the triplet in combination with NHER2 versus NHER2 monotherapy would require a new trial of the safety of the triplet with NHER2, and it's further complicated by the fact that NHER2 is trastuzumab-based which would complicate giving the triplet, which includes trastuzumab, with in HER2. The third option of studying neuratinib in a different indication would require us to redo the randomized three-arm study, which tested neuratinib plus trastuzumab plus fulvestrant versus trastuzumab plus fulvestrant versus fulvestrants alone in a new population, such as an earlier stage group of patients who are fulvestrant-naive or a later group of patients who have already received in HER2. Due to the rarity of the HER2 mutation in breast cancer and the time it would take to enroll this three-arm randomized trial and the subsequent Simons two-stage expansions, it is not clear that this can be accomplished in a timeframe that would result in a positive return for PUMA shareholders. PUMA plans to submit the final data from Summit to the FDA later this year to confirm our thoughts on this indication with the FDA and obtain their guidance. PUMA will continue to update investors on the status of this as it progresses. As investors are also aware, in November 2020, we announced interim data from another cohort of the summit trial, and more specifically, the cohort of patients with metastatic non-small cell lung cancer with epidermal growth factor exon 18 mutations who have been previously treated with an EGFR-targeted tyrosine kinase inhibitor. As was shown in the data that was presented, there were four responders out of 11 patients and therefore the criteria had been met to proceed to stage two of the Simon's two-stage design and to enroll 30 patients. There are currently 31 patients enrolled in this arm of the trial, and we anticipate that we will have additional data from this cohort to report in the second half of 2022. Once we receive the data, we plan to meet with the FDA to discuss the regulatory pathway for this indication. PUMA anticipates that the FDA will either allow the company to file for accelerated approval based on single arm data or may require additional data or a separate randomized trial for this indication. If a randomized trial is required, the company will make a decision whether or not to proceed based on the time and cost of the trial versus the potential market opportunity. Enrollment to this arm of the trial has been halted while we analyze the current data and wait for regulatory guidance. As mentioned on prior earnings calls and in response to investor questions, Puma is also evaluating several drugs to potentially end license that would allow the company to diversify itself and leverage Puma's existing R&D, regulatory, and commercial infrastructure. Puma will continue to update investors on the status of this as it progresses. I will now turn the call over to Jeff Ludwig, Puma's Chief Commercial Officer, for a review of our commercial performance during the course.

Thanks, Alan, appreciate it. And thanks to everyone for joining our second quarter earnings call. Before I move into the commercial review, just a reminder that I will be making forward-looking statements. Now, I continue to be inspired by the stories of women battling breast cancer, but saddened by the overall impact of this disease. I am hopeful given the progress being made, but know there is so much more that needs to be done. We remain committed to helping women and their families battling breast cancer, and believe that Neuralinks can play a more important role in both early stage disease as well as in metastatic disease. Our overall commercial strategy has not changed. We remain focused on three areas. Number one, leveraging and communicating the evolving positive clinical data for Neuralinks. Number two, engaging and educating patients about the risks and benefits of Neuralinks. And three, increasing our impact through field force execution and evolution. I'm happy to say that progress was made on all three fronts in Q2. Now, let me provide a little more color around this statement. In Q2, we updated several of our promotional tools to better communicate the clinical benefits of Nearlinks, rolled out a new case-based speaker deck, which has been very well received, and continued to refine our personal and non-personal promotion mix. In addition, our field teams further engaged with local and regional advocacy organizations to better support and educate patients throughout their breast cancer journey. And lastly, we saw steady increases in HCP calls per day made throughout Q2, and our mix of live versus virtual interactions have continued to evolve. In Q2, more specifically, over 75% of our Salesforce interactions were live versus virtual engagements. Now, the ebb and flow of COVID has been hard to predict, but we are hopeful this trend will continue. As I said up front, I have been inspired by the stories of women battling breast cancer, but saddened by the overall impact of this disease. The extended adjuvant breast cancer market is significantly under-penetrated, and we remain committed and focused on doing more to help support women throughout their battle with breast cancer. With that high-level update, let me transition to some of the U.S. commercial slides Once I have finished my remarks, I will turn to call over to Maximo for a more detailed review of our financial results. Looking at slide three, our distribution model has not changed. We have two channels that provide Neuralinks to patients. We refer to these as our specialty pharmacy channel and our specialty distributor channel or in-office dispensing channel. The majority of our business continues to flow through the specialty pharmacy channel. In Q2, approximately 79% of our business went through this channel, with the remaining 21% of the business flowing through the specialty distributor channel. This is slightly different, but very similar to the 81% specialty pharmacy and 19% specialty distributor mix that we reported in our Q1 earnings call. Moving to slide four, slide four shows U.S. quarterly net sales of Neuralink since FDA approval. As Alan noted, our net product sales were $51.3 million in the second quarter of 2022. This is a $10.6 million increase from the $40.7 million we reported in Q1 of 2022. This quarter-over-quarter increase is being driven by an estimated $4.3 million inventory drawdown that occurred in Q1 of 2022 and an estimated $2.7 million inventory build that occurred in Q2 of 2022. On slide five, slide five shows the bottles of Neuralink sold by quarter since launch. Please note that this slide shows ex-factory bottles sold, so it represents sales into our specialty pharmacy and specialty distributor channel and not end user demand. We sold 3,200 bottles of Neuralink in Q2 of 2022, which is an increase of 520 bottles from our Q1 2022 bottle sales of 2,680. The majority of this increase was a direct result of the 282 bottle inventory drawdown that occurred in Q1 of 2022 and the subsequent 175 bottle inventory build that occurred in Q2 of 2022. Now let me provide some additional insight into the business. New prescriptions and new patient starts are clearly an important leading indicator for our business. We follow these trends very closely. New patient starts turned into refills, which influences subsequent quarters in terms of total bottles sold. As highlighted in previous earnings calls, we tend to see a decline in new patient starts in the fourth quarter due to some patients deciding to delay starting Neuralink's therapy until after the Q4 holidays. This decreases Q4 new patient starts, but subsequently increases Q1 new patient starts. Now this pattern did play out as previously mentioned during our Q1 earnings call. Playing this forward, this also impacts quarter over quarter comparisons in Q2 since you're comparing Q2 to an artificially high Q1. In Q2 we saw an 8% decline in new patient starts as compared to Q1. Now, looking at year-over-year comparisons, new patient starts in Q2 of 2022 were flat compared to Q2 of 2021. This is the first time since launch we have not seen a negative Q2 year-over-year decline. Transitioning to total prescriptions, we saw a Q2 quarter-over-quarter increase of 1.6% and a Q2 year-over-year decrease of 6.3%. The commercial team is focused on trying to drive consistent quarter-over-quarter growth and subsequent year-over-year growth. Now, in regards to free drug, we continue to see an increase in the number of patients qualifying for a free drug through our patient assistance program. This is being driven largely by an increase in Medicare patients who cannot cover the cost of their copay and are unable to obtain financial assistance due to limited availability of copay support from local, regional, or national foundations. Moving to slide six, as previously reported, we were excited to have dose escalation added to our label in late June of last year for both our extended adjuvant indication as well as our metastatic indication. In addition, we're pleased that NCCN updated their 2022 clinical practice guidelines for breast cancer to include dose escalation in early stage breast cancer. As you can see on slide six, we continue to see an increase in the adoption of dose escalation. In Q2, approximately 65% of patients who received commercial drug started Neuralynx on a lower daily dose. Dose escalation can clearly benefit patients by significantly reducing both the amount of grade three diarrhea and the median days of grade three diarrhea, as well as reducing the overall discontinuation rate. Now, we are pleased with the adoption of dose escalation and are committed to seeing this adoption continue to grow. Slide 7 highlights the strategic collaborations we have formed across the globe with the goal of making Neuralinks available to more patients around the world. We are pleased with our global partners and the progress being made. In Q2 of 2022, we saw regulatory approval in the Philippines for the extended adjuvant indication, and just recently in Q3, Neuralinks was launched in Spain, and Ecuador received regulatory approval in the metastatic breast cancer indications. Our global partners are preparing for additional launches and working hard to drive increased adoption. I look forward to highlighting their future progress. Now, PUMA was founded on a commitment to making a difference in the lives of patients and their families battling breast cancer. I want to thank our global partners, my commercial colleagues, and the entire cross-functional PUMA organization for their continued passion and commitment to making such a difference. We know more must be done and we will not stop until we have achieved our goals. I will now turn the call over to Maximo for a review of our full financial results.

Thanks, Jeff. I will begin with a brief summary of our financial results for the second quarter of 2022. Please note that I will make comparisons to Q1 2022, which we believe is a better indication of our progress as a commercial company than year-over-year comparisons. For more information, I recommend that you refer to our Q2 2022 Thank You, which will be filed today and includes our consolidated financial statements. For the second quarter of 2022, we reported net income based on gap of $9.4 million, or $0.21 per share. This compares to a Q1 2022 net loss of $3.4 million, or $0.08 per share. On a non-GAAP basis, which is adjusted to remove the impact of stock-based compensation expense, we reported net income of $12.6 million, or $0.28 per share, for the second quarter of 2022. Gross revenue from Netherlands sales was $63.4 million in Q2 2022 versus $51.5 million in Q1 2022. As Alan mentioned, net product revenue from Netherlands sales was $51.3 million compared to the $40.7 million we reported in the first quarter of 2022. We believe that Q2 net sales included approximately $2.7 million of inventory and bill from our distributors. Royalty revenue totaled $8.2 million in the second quarter of 2022, an increase from $5 million in Q1 2022. Our gross to net adjustment in Q2 2022 was 19%, compared to the 21% gross to net adjustment in Q1 2022. Lower Medicaid share, lower co-pay, and lower coverage gap due to seasonality are the main drivers for the decline versus prior quarter. Cost of sales for Q2 2022 was $14.9 million. including $2 million for the amortization of intangible assets related to our Neuraltinib license. Cost of sales for Q1 2022 was $10.8 million. Going forward, we will continue to recognize amortization of milestones to the licensor for about $2 million per quarter as cost of sales. For the fiscal year 2022, PUMA reiterates its prior guidance that net product revenue will be in the range of $180 to $190 million. We also anticipate that our gross to net for the full year 2022 will be between 20% and 21%, slightly better than our prior . Furthermore, for fiscal year 2022, we anticipate receiving royalties from our partners around the world in the range of $27 to $30 million, lower than our prior guidance due to the timing of our Netflix shipments to our partner in China and potential negative foreign exchange impact. We don't expect licensed revenue in 2022. In addition, we expect our full year net income to be in the range of $6 to $10 million. We recognize there continues to be a great deal of uncertainty regarding the impact of COVID-19 and this may continue to negatively impact our sales, royalties, and license revenue. We anticipate that for Q3 2022, NALIX net sales will be in the range of 44 to 47 million. This guidance assumes that some of the inventory buildup in Q2 is reduced in Q3. We additionally anticipate that we will see an additional increase in inventory in Q4, as we have seen in prior years. We expect Q3 royalty revenues will be in the range of 3 to 6 million. This is a reduction in the royalty revenue compared to Q2. This reduction is caused by the timing of shipments to our partner in China. According to our agreement, Puma receives royalties when the product is sold to the distributor in China. The timing of these shipments and sales have been negatively impacted by the challenges associated with supply chain delays and the various shutdowns in China. Precisely forecasting the shipping and delivery times have been challenging. Therefore, we are conservatively anticipating that shipments we were expecting in Q3 could move to Q4, which will subsequently reduce Q3 royalties and increase Q4 royalties. We further estimate that our gross net adjustment in Q3 2022 will be approximately 19.5% to 20.5%. PUMA anticipates a Q3 net loss between $1 million and $2 million. SG&A expenses were $20.6 million in the second quarter of 2022, compared to $20.4 million for the first quarter. SG&A expenses included cash charges for the stock-based compensation of $2.1 million for the second quarter of 2022, compared to $2.2 million for Q1 2022. SG&E expenses in Q2 included a payroll tax credit under the CARES Act of $2 million. Research and development expenses were $12 million in the second quarter of 2022, compared to $15.2 million for the first quarter. R&D expenses included non-cash charges for stock-based compensation of $1.1 million in the second quarter of 2022, compared to $0.9 million for the first quarter. R&D expenses in Q2 2022 included a payroll tax credit under the CARES Act of $1.9 million. In the second quarter of 2022, PUMA reported cash burn of approximately $14 million. compared to cash burn of approximately $17 million in Q1 2022. Our Q2 2022 cash burns includes a final payment of approximately $27.1 million related to our class action lawsuit. As a reminder, in Q1 2022, we made a payment of $27.1 million related to the class action lawsuit and executed a private placement for $10 million. As a result of cost containment actions across the company implemented in the fourth quarter of 2021, PUMA continues to expect lower operating expenses in 2022 compared to 2021. More specifically, we anticipate SG&A expenses to be down approximately 15% to 20% and R&D expenses to be down 10% to 15% year over year. On June 30th, 2022, we had $60.8 million in cash, cash equivalents, and marketable securities. Our accounts receivables balance was $34 million. Our accounts receivables terms range between 10 and 68 days, while our day sales outstandings are about 44 days. We estimate that as of June 30, 2022, our distribution network maintained approximately four weeks of inventory. Overall, we continue to deploy our financial resources to focus on the advancement of neratinib through ongoing clinical trials and the commercialization of nerics.

Thanks, Maximo. During 2020 and 2021, the COVID-19 pandemic presented significant commercial challenges to PUMA and presented significant barriers to commercial access for PUMA's commercial team. As Jeff mentioned, we are starting to see a positive trend in face-to-face interactions with HCPs, which we believe is the result of COVID cases declining and vaccination and booster rates increasing, resulting in these commercial barriers reducing. However, we also recognize the uncertainty as to whether access to health care providers will continue to trend positively. We are remaining conservative in our outlook for improvements in access for this year. Puma Senior Management, in cooperation with the Board of Directors, continues to remain focused on improving Neuralink sales in 2022 and beyond. In the fourth quarter of 2021, we implemented a reduction in expenses with the goal of reducing expenses in order to maximize operating cash flows. We believe that the positive net income reported in the quarter was a direct result of these expense reductions. The company remains committed to continuing to achieve these operational cash flows, and 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 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?

Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. If you wish to withdraw your request, please press star 2. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Jeff Meechan with Bank of America. Please proceed with your question.

Good afternoon. So this is Hao calling in for Jeff Meechan. Thanks for the question. So I think my first question is really, you know, as we mentioned, given COVID recovery, we are seeing more live interactions for your Salesforce. I just wonder, in terms of the Salesforce structure, do you see any, you know, change needed to sort of adapt to these more live interactions? per se, or are you seeing maybe the mix of virtual plus live would be sort of the new normal moving forward?

Hey, Hal, appreciate that question, and it makes good sense. What I'll tell you is a couple things. One, we firmly believe Neuralinks is promotionally sensitive, so getting that Salesforce share voice out there is very important to us. We're very happy to see that live visits continue to increase in Q1 versus Q2, and we certainly hope that trend continues. We did restructure in the latter half of last year. I can tell you that I feel currently like we are at the right size to capitalize on the opportunity, given some of the restrictions that are out there in the oncology space. And specifically, you commented on something. I do believe the new normal will be a combination of live versus virtual. We pay very close attention to the effectiveness of our field force, and as I said right now, we feel good about it. If we feel at a later date that things need to change, we'll certainly make adjustments and talk about that then, but feel very good right now with the trends.

Yeah, I can imagine that. I think that right now we're very comfortable with the size of the sales force. If we start to see sales growth, which would necessitate we need to increase the size of it, we would certainly address that, but we would need to see you know, a significant trend of sales growth in order for us to increase the size of it.

Awesome. Thank you.

Thank you. Your next question comes from Divya Rao with Cowen. Please proceed with your question.

Hi. Thanks for taking my question. This is Divya on for Mark. This is more about clarification, but will you guys be presenting updated HER2-mutated breast cancer data before taking it to the FDA, or can we expect kind of a concurrent disclosure of the data along with the go, no-go label expansion decision? And then just curious if we could get a little bit of color on the compliance rates now that the dose titration regimen has been on the label for about a year now. Thank you.

So, Divya, on the first one, I would anticipate we will probably present updated data on the basket trial, the summit trial for breast cancer at the San Antonio Breast Cancer Meeting. That would be my assumption. Whether or not we would do it concurrent with a FDA disclosure or just present it at the meeting, I don't know the answer to that. It depends on which, you know, the timing of when those are occurring. But I would anticipate there will be additional disclosure of the data this year.

And, Divya, let me take that second question regarding dose escalation and if we're seeing an impact on duration or persistency. Again, we're very happy to see that adoption continue to grow. As you see and you look at the slide, the majority of that increased adoption did occur within the last year. following the inclusion of dose escalation into our label. So that yearly cohort of patients has not had enough time to mature, but we're certainly monitoring that group. But let me give you some more insight, though. Looking back at fully matured yearly cohorts, what I can tell you what we've seen is we've seen a steady increase in the length of the therapy going back 2018, 2019, and 2020 for patients who started on a lower dose. with the largest increase in compliance occurring in 2020 or more recently. Now if I look at smaller cohorts, even look at some monthly cohorts, say in the last Q4, Q1, what I can tell you also as we monitor those patients that start on lower dose, we clearly don't have the ability to follow that entire length of therapy because those cohorts haven't matured. But if you think about dose escalation likely to have the biggest impact in the first month or two, What I can tell you is that we see a benefit in the tune of about 5% to 7% increase in compliance between month one and month two. So we are seeing that benefit. Now, will that benefit continue to play out through the full length of therapy? I don't know yet. We'll follow that very closely, but we do like to see that early positive impact. We also know through market research that physicians are very positive, physician staff are very positive, and we've got strong podium support. I will point out the obvious, though, that adherence has many other factors besides length of therapy from treatment fatigue, overall benefits, cost, side effects, et cetera. So we are watching those cohorts very closely.

That's really helpful. Thank you so much.

You're welcome.

Your next question comes from the line of Tina Wang with Barclays. Please proceed with your question.

Hi, this is Sheldon for Gina. Thanks for taking our questions. Maybe something on the OPEX. You reiterated your guidance on the cost cutting on R&D and SDNA, but so far for the first two quarters of the year, it seems like if the trend continues, you will probably have much more cost savings than your guidance. So do you expect the second half to significantly ramp up on both R&D and SG&A? And more longer term, what efforts would you further make to achieve more sustainable profitability? Thanks.

Hi. I'm sorry. Can you clarify your question regarding the R&D expenses and the SG&A? Yeah.

I think if you just take the second quarter run rate, it seems like the annual R&D and SG&A will come with a higher reduction of expense than your guidance of 10% to 15% R&D, 15% to 20% SG&A. Is that correct? If you achieve the annual cost saving in those range, seems to imply that the second half would have some ramp up.

So just to clarify, right, as I mentioned on the call, Q2, we had a credit, a CARES Act credit on our payroll for about $3.8 million. So you need to net that out of the run rate if you're looking at that. And also if you look at a comparison Q2 versus year-to-date versus the prior year, Last year we had a one-time warrant cost on the stock-based compensation, so you need to also take that into account.

I see. I think that's the difference. Thank you so much. My second question is more about long-term profitability.

Yeah. Okay. So in terms of your second question, you know, as we gave you guidance, we are expecting to be net income positive for the year. I believe we said a $1 million to $2 million net loss in Q3, and that would obviously imply Q4 is positive net income again. We certainly recognize the importance of being net income positive and cash flow positive, and absolutely, as I said at the end of my speech, us focusing on protecting those cash flows and net income is something very important to us. So if additional cost cuts need to be made, to continue our, you know, the company being cash flow positive and net income positive, we are, of course, committed to doing that.

Thank you so much.

Thank you. This concludes our question and answer session. I would like to turn the conference back to Mary Ann for closing remarks.

Thank you for joining us today. As a reminder, this call may be accessed via replay of the webcast at PumaBiotechnology.com beginning later today. Have a good evening.

Ladies and gentlemen, thank you for participating in today's conference call. This concludes our program. Everyone have a great day. You may now disconnect.