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spk05: Good afternoon. My name is Alicia and I'll 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 would like to ask a question during that time, simply press star then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 2. And if you should require operator assistance during the conference, please press star zero. As a reminder, this call is being recorded. I would now like to turn the conference call over to Marianne O'Hanison, Senior Director of IR for PUMA Biotechnology. You may begin your conference. Thank you, Alicia.
spk06: Good afternoon and welcome to PUMA's conference call to discuss our financial results for the fourth quarter of 2023. Joining me on the call today are Ellen 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 fourth quarter and full year 2023 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 sessions 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 SEC from time to time, including our annual report on Form 10-K for the year ended December 31, 2023. 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, February 29, 2024. 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 fourth quarter 2023 news release for a reconciliation of our GAAP to non-GAAP results. I will now turn the call over to Alan.
spk01: Thank you, Marianne, and thank you all for joining our call today. Today, PUMA reported total revenue for the fourth quarter of $72.2 million. Total revenue includes product revenue net, which consists entirely of near-link sales, as well as royalties from our sub-licensees. Product revenue net was $53.2 million in the fourth quarter of 2023, which was an increase from the Q3 2023 and slightly below 53.7 million reported in Q4 2022. Product revenue for the fourth quarter of 2023 was impacted by approximately 2.1 million of inventory increase at all specialty pharmacies and specialty distributors. Royalty revenue was 19 million in the fourth quarter of 2023 compared to 4.5 million in Q3 of 2023 and 12 million in Q4 of 2022. We reported 2,881 bottles of Neuralink sold in the fourth quarter of 2023, essentially unchanged from the 2,874 bottles sold in Q3 of 2023. In Q4 of 23, we estimate that inventory increased by about 127 bottles. In Q4 of 2023, new prescriptions, or NRX, were down approximately 9% compared to Q3 of 2023, and total prescriptions, TRX, were down approximately 7% compared to Q3 23. Jeff will provide further details in his comments and slides. Near-link sales were negatively impacted by the decline in enrollments that we mentioned in our third quarter earnings call, a lower than anticipated rate of conversion from enrollment to commercial new patient starts, and a higher than expected gross to net. Jeff and Maximo will discuss these two topics further in their comments. We have continued to reduce our internal expenses to account for these factors as we recognize our fiscal responsibility to the shareholders and continue to be net income positive in 2024. I will now provide a clinical review of the quarter, then Jeff Ludwig will add additional color on Neerlink's commercial activities, and Maximo Noguez will follow with highlights of the key components of our financial statements for the fourth quarter of 2023. In February, we were pleased to announce that we initiated the Allocertib in Cancer, or ALISCA Lung 1 trial, a phase two clinical trial of allocertib monotherapy for the treatment of patients with extensive stage small cell lung cancer. This trial was previously referred to as study PUMA-ALI-4201. The trial will enroll up to 60 patients with extensive stage small cell lung cancer who have progressed after first-line platinum-based chemotherapy and immunotherapy. Patients must provide tissue-based biopsies so that biomarkers can be analyzed. Alacerdib will be dosed at 50 milligrams BID on days one to seven of every 21 day cycles. PUMA plans to perform an initial interim analysis for the evaluation of the biomarkers as well as an evaluation of efficacy. As we discussed in our last earnings call, The goal of this Phase II study will be to confirm the efficacy of allosterative monotherapy in patients with small cell lung cancer with biomarkers where the aurora kinase pathway plays a role. The goal would be to correlate the efficacy of these biomarkers subgroups in the ELISCA Lung 1 study to the efficacy that was previously seen in the biomarker subgroups from the randomized trial of paclitaxel plus allosterative versus paclitaxel plus placebo That was previously published in the Journal of Thoracic Oncology in 2020. If the efficacy and biomarker data are comparable from the two studies, the company believes it would represent a potential accelerated approval strategy and would engage FDA to discuss this further. We currently have four sites open for enrollment and expect to have 10 to 15 sites open within the next 30 to 60 days. We anticipate that we will be able to share interim data from this trial with investors in the second half of 2024. We also anticipate the initiation of ALISCA Breast 1, a phase two trial of Alacertib in combination with endocrine treatment in patients with chemotherapy and IAs, HER2 negative hormone receptor positive breast cancer in Q4 of 2024. We additionally anticipate two clinical data presentations on Alacertib in the first half of 2024. Investors will remember that the Phase II trial referred to as TBCRC41, which was a Phase II trial of allocertib monotherapy versus allocertib plus endocrine therapy in patients with HER2 negative hormone receptor positive metastatic breast cancer, was published in JAMA Oncology in 2023. As part of this trial, an analysis of biomarkers was performed in order to determine if the efficacy of allocertib in patients with HER2 negative hormone receptor positive metastatic breast cancer correlates with any biomarkers. We anticipate that the biomarker data from this trial will be presented in the first half of 2024. In addition, there is an ongoing investigator-sponsored trial of aliceridib given in combination with osimertinib in patients with metastatic EGFR mutant non-small cell lung cancer. More specifically, Patients with metastatic EGFR mutant non-small cell lung cancer are treated with osimertinib, and then at the time of progression, aliceridib is added to osimertinib in order to see if aliceridib can overcome osimertinib resistance. Interim data on this trial was previously presented at ASCO prior to PUMA licensing the drug. We anticipate that updated data from this trial will be presented in the first half of 2024. Most notably, a recent biomarker analysis from this trial has demonstrated a subgroup of patients with a biomarker where the rorokinase pathway plays a role, where aliceridib appears to have much greater efficacy when added to osomertinib at the time of progression on osomertinib. This biomarker occurs in about half of the patients in the trial, which is consistent with the published literature on this biomarker in this patient population. Based on this biomarker data, the trial is being amended to limit enrollment in the trial to only continue enrolling patients who have this biomarker. We believe that this might represent another potential indication for L-acertib, and we look forward to discussing this data with investors once it has been presented publicly. As mentioned on previous earnings calls and in response to investor questions, PUMA continues to evaluate several drugs to potentially in-license 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 Jeff Ludwig, Puma's Chief Commercial Officer, for a review of our commercial performance during the quarter.
spk02: Hey, thanks, Alan. Appreciate it. And thanks to everyone for joining our fourth quarter earnings call. Before I move into the commercial review, Just a reminder that I will be making forward-looking statements. Let me again start with a high-level overview of our commercial strategy, and then I will go into more details as we discuss specific slides. From a commercial strategy perspective, we believe that NeurLynx can benefit patients in a metastatic setting, but we remain heavily focused on early-stage breast cancer. We do not have direct competition in the extended adjuvant setting and believe that there remains significant unmet need, especially for patients who are deemed to be at higher risk of reoccurrence. We want to see Neuralynx play a larger role in helping patients reduce their risk of reoccurrence and avoid metastatic disease. We believe Neuralynx continues to be promotionally sensitive. Our sales and marketing teams are working hard to expand their reach and frequency, both with personal and non-personal promotions. HCP calls in the fourth quarter increased about 12% year over year, with about 80% of those calls being live interactions. In addition to peer call activity, we are using internal and external data to try and improve our abilities to engage with clinicians at the right time, given the various treatment decisions and duration of therapies. Finally, as a commercial organization, we remain committed to being more efficient and effective with our resources. We will continue to adapt to the changes in the business and the needs of the broader PUMA organization. Let me now transition to some of the commercial slides where I will provide some additional specifics around performance. Once I have finished, I will turn the call over to Maximo for a more detailed review of our financial results. Turning to slide three. Slide 3 provides an overview of our distribution model. Now, this model has not changed and remains separated into two distinct channels, the specialty pharmacy channel and the specialty distributor channel. We do see quarterly fluctuations, but the majority of our business continues to flow through the specialty pharmacy channel. In Q4, about 74% of our business went through the specialty pharmacy channel, and the remaining 26% went through the specialty distributor channel. As a comparison, this compares to the 80% specialty pharmacy channel and 20% specialty distributor channel that we reported in Q3 of 23. Turning to slide four, Neuralink's net revenue in Q4 2023 was $53.2 million, which is a $1.6 million increase from the $51.6 million we reported in Q3 of 23, and about a $500,000 reduction from the $53.7 million we reported in Q4 of 2022. Inventory changes will impact these comparisons, so let me provide some additional information here. In Q4 of 2023, we estimated that inventory increased by about 2.1 million. As a comparison, we estimate that inventory increased by about 600,000 in Q3 of 23 and increased by about 2.6 million in Q4 of 2022. Turning to slide five, slide five shows Q4 2023 ex-factory bottle sales and also provides both a year-over-year and a quarter-over-quarter comparison. In Q4 of 2023, Neuralink's ex-factory bottle sales were 2,881, which represents a slight increase of about 0.2 percent quarter-over-quarter and a 13 percent decline year-over-year. Let me again provide more specifics around the inventory impact, which is also included at the bottom of this slide. We estimate that inventory increased by about 127 bottles in the fourth quarter of 2023. As a comparison, we estimate that inventory increased by about 164 bottles in Q4 of 2022 and increased by about 32 bottles in Q3 of 2023. Now, let me share some additional metrics and insights into our fourth quarter performance. In Q4, we saw new patient starts, or NRX, decline about 9% quarter over quarter and about 25% year over year. In terms of total prescriptions, or TRX, we saw about a 7% quarter over quarter decline and about a 17% decline year over year. Our SD business did grow 10% quarter over quarter and about 4% year over year. As a reminder, we do not pick up NRX or TRX data in the SD channel. Overall demand decreased 3.1% quarter over quarter and about 12.8% year over year. As Alan mentioned, Q4 performance was negatively impacted by several factors. First, let me talk about enrollments. Enrollments are a very important leading indicator as they convert into new patient starts. New patient starts turn it into refills which influence performance in subsequent quarters. Q4 performance was negatively impacted by the decline in enrollments we saw in Q3 and discussed during the Q3 earnings call. Soft Q3 enrollments have a negative impact on fourth quarter new patient starts, TRX, and overall demand. As I mentioned during the third quarter earnings call, we did see the enrollment trend improve as the third quarter progressed. Early in the fourth quarter, we increased the amount of HCP non-personal promotion. As we have discussed with investors in prior earnings calls, we typically see a decline in enrollments in the fourth quarter as patients delay starting therapy until after the holidays. In Q4, we were pleased to see enrollments continue to improve from Q3, and we saw Q4 enrollments grow 12% sequentially. This is the first time we have seen this growth Q4 over Q3. We are hopeful that this increase in non-personal promotion was a contributor to this enrollment growth. However, we are waiting on additional data before making that conclusion. The second factor that negatively impacted our Q4 performance was the conversion rate from enrollments to commercial new patient starts. In Q4, we saw a decrease in a percent of patients converting from enrollments to new patient starts, with the majority of that being driven by an increase in PAP or free goods. We do see quarterly fluctuations in these conversion rates, but in Q4, we had this metric move in a negative direction. Turning to slide five, slide six, excuse me. Slide six highlights the adoption of dose escalation since launch. We continue to believe that monitoring the adoption of dose escalation is an important metric for NeurLynx. Patients that started a reduced dose will experience significantly lower grade three diarrhea and are likely to have a lower rate of discontinuation. In Q4, approximately 76% of patients who received commercial drug started NeurLynx on a lower daily dose. We have seen a fairly steady increase in the adoption of dose escalation over the last several years, and I am pleased with the feedback that we receive from customers. Slide seven highlights the collaborations we have formed across the globe. I have highlighted in red a number of updates since our Q3 earnings call. We are pleased to announce that in late Q3, Nearlinks received regulatory approval in Mexico, in the metastatic setting and also received regulatory approval in the United Arab Emirates in the extended adjuvant setting. In addition, in Q1, Neuralinks recently received regulatory approval in Syria in the extended adjuvant setting and was officially launched in Morocco also in the extended adjuvant setting. We truly appreciate all the efforts put forth by our partners to make Neuralinks available to more patients around the world. I'd like to wrap up by thanking my colleagues at PUMA for their passion and dedication to making an impact on the lives of patients and their families battling cancer. This team is committed to finding ways to be more efficient and effective and adapting to the changing needs of the business. I will now turn to call over to Maximo for a review of our full financial results. Maximo?
spk00: Thanks, Jeff. I will begin with a brief summary of our financial results for the fourth quarter of 2023. then I will make a comparison to Q3 2023, 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 2023 10-K, which will be filed today and includes our consolidated financial statements. For the fourth quarter of 2023, we report a net income based on gap of $12.3 million, or $0.26 per share. This compares to net income in Q3 2023 of $5.8 million, or $0.12 per share. On a non-GAAP basis, which is adjusted to remove the impact of stock-based compensation expense, we reported net income of $14.8 million, or $0.31 per share, for the fourth quarter of 2023. Broad revenue from NERLINK sales was $64.9 million in Q4 2023, and $60.4 million in Q3 2023. As Alan mentioned, net product revenue from nailing sales was $53.2 million, an increase from the $51.6 million reported in Q3 2023. Q4 net sales were impacted by lower enrollments in Q3, as well as a higher gross to net in Q4. Inventory buildup by our distributors was approximately $2.1 million in Q4, which was lower than expected, versus approximately $0.6 million of buildup in Q3 2023. Royalty revenue totaled $19 million in the fourth quarter of 2023, compared to $4.5 million in Q3 2023. The higher royalties versus Q3 reflect the timing of shipments to our partner in China, as we noted last quarter. Our gross net adjustment in Q4 2023 was about 18.1%, compared to the 14.6% gross net adjustment reported in Q3 2023. Higher Medicaid share, particularly from patients in Puerto Rico, and higher government-charged SPACs were the main drivers of the increase versus Q3 2023. The cost of sales for Q4 2023 was $24.3 million, including $2.4 million for the amortization of intangible assets related to our neratinib license. Cost of sales for Q3 2023 was $13.3 million. Going forward, we will continue to recognize amortization of milestones to the licensor of about $2.4 million per quarter as cost of sales. For fiscal year 2024, PUMA anticipates that net net length product revenue will be in the range of 183 to 190 million. We also anticipate that our gross to net adjustment for the full year 2024 will be between 21.5% and 22.5%, driven by the Inflation Reduction Act and higher expected Medicaid rebates. In addition, for fiscal year 2024, We anticipate receiving royalties from our partners around the world in the range of $30 to $33 million. We expect licensed revenue in 2024 in the range of $1 to $2 million. We also expect that net income for the full year will be in the range of $12 to $15 million. We anticipate that for Q1 2024, Nalix product revenue net will be in the range of $38 to $40 million. Also, we expect Q1 royalty revenues will be in the range of $2.5 to $3 million and no license revenue. We further estimate that the gross to net adjustment in Q1 2024 will be approximately 23% to 24%. PUMA anticipates a Q1 net loss between $10 and $12 million. Sorry, let me repeat that. PUMA anticipates a Q1 net loss between $10 and $12 million. As investors are aware, Q1 usually represents the lowest net product revenue of the fourth quarter due to the burn-off from inventory built from Q4. Also, due to our litigation expense and a one-time assertive expense, we expect higher expenses in Q1 than other quarters in 2024. Due to those items, we are forecasting a net loss in Q1, but anticipate that we will be net income positive for the remainder of 2024 as well as for the full year. SGN expenses were $20.2 million in the fourth quarter of 2023, compared to $22.8 million for the third quarter. SGN expenses included non-cash charges for stock-based compensation of $1.8 million for Q4 2023, unchanged from Q3 2023. Research and development expenses were $12.9 million in the fourth quarter of 2023, compared to $11.4 million for the third quarter. R&D expenses included non-cash charges for stock-based compensation of $0.8 million in the fourth quarter of 2023 and change from the third quarter. On the expense side, PUMA anticipates flat total operating expenses in 2024 compared to 2023. More specifically, we anticipate as G&A expenses to decrease by 8% to 12% and R&D expenses to increase 17% to 20% year over year. Due to our litigation expenses, we expect G&A expenses in Q1 and Q2 to be significantly higher than Q3 and Q4. In the fourth quarter of 2023, UMA reported cash earned of approximately $10.4 million. This compares to cash earned of approximately 10.6 million in Q3, 2023. For the full year, PUMA reported cash earned of approximately 14.4 million. 2023, we made a 12.5 million payment for a sales milestone to Pfizer and an $8 million settlement payment as well. On December 31st, 2023, we had approximately 96 million in cash. cash equivalents, and marketable securities, versus $81 million a year earlier. Our accounts receivables balance was $47.8 million. Our accounts receivables terms range between 10 and 68 days, while our day sales outstandings are about 46 days. We estimate that as of December 31, 2023, our distribution network maintained approximately three weeks of inventory. Overall, we continue to deploy our financial resources to focus on the commercialization of Nearlinks, the development of Alicertif, and controlling our expenses.
spk01: Thanks, Maximo. We are pleased to report positive net income for the fourth quarter of 2023 and for full year 2023. Puma Senior Management, in cooperation with the Board of Directors, continues to remain focused on near-link sales trends in 2024 and beyond, and recognizes its fiscal responsibility to shareholders to continue to maintain positive net income. In the fourth quarter of 2021, we implemented a reduction in expenses with the goal of reducing expenses in order to maximize operational cash flows. We believe that the positive net income reported in the fourth quarter and for the full year 2023 reflects these expense reductions. The expense reductions that we have previously performed and continue to perform are also a major contributor to the positive net income that the company is guiding to for full year 2024. The company remains committed to continuing to achieve this positive net income 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 and 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 call back to the operator for Q&A. Operator?
spk05: 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. One moment please while we poll for questions. Your first question comes from the line of Divya Rao with TD Cowan. Please proceed with your question.
spk04: Hi guys, congrats on the quarter. This is Divya on for Mark. So I had a few questions on the phase two trial in small cell lung cancer. One would be, I guess in terms of the second half day disclosure, should we expect it to be at a medical meeting or do you think it could be a press release. And then my second question is, I know you mentioned that the biomarker data was going to be one of the metrics that you use from the interim analysis to determine whether you move forward with talking with the FDA. Is the allocertib combo trial with paclitaxel also the best bar to look at when you're looking at efficacy? And do you feel like you want to see both the biomarker and the efficacy data kind of line up with that trial before moving forward with the FDA on future discussions. Thanks.
spk01: Yeah, so Divya, thank you for your question. In terms of the disclosure, I would imagine there would be something more direct to investors, not at a medical meeting because, you know, to present at a medical meeting, you have to submit an abstract, and there's a lead time there, and I'm not sure you know, how much data we would have to submit to a medical meeting. So a medical meeting presentation, I would guess, probably more of a 2025 event. But, you know, presenting that in some way, shape, or form to investors, that would be the way we would do this. And obviously, you know, as much detail as we can. You know, as we mentioned, we're going to be greatly increasing the number of sites, you know, this month. And so, you know, we're anticipating we're going to have a good number of patients to talk about. In terms of your second question, so, you know, Obviously in small cell lung cancer you have both the chemotherapy sensitive group and the chemotherapy refractory group or the resistant group. So you kind of have two different, you know, it's not totally homogeneous. I don't know that like cross-trial comparison is going to be like compared to this trial or that because it gets a little tricky in terms of prior treatments and things like that. I think the clear signal we're looking for is both, you know, response rate and PFS. But to see something that's better, in the group that has the biomarker than doesn't from the early data. Because again, you know, the thesis we have is that, you know, aliceridib is an aurora kinase inhibitor, so the biomarkers that are involved in the aurora kinase pathway is where we should see the best efficacy. That's really the signal we want to confirm. Because of different numbers and things like that, I'm not quite sure if we're going to want to do, you know, cross-trial comparisons quite yet. But in terms of the early data, that's really what we're going to be looking for is to see, you know, is there a biomarker subgroup that selects for the patients who are most likely to benefit from the drug?
spk04: Got it. That's helpful. Thank you.
spk05: Thank you. Our next question comes from the line of Dina Wang. Please proceed with your question.
spk03: Hi. Good afternoon. Thanks for taking your questions. This is Hershita on for Gina. I had a couple on allosterative. And Alan, you touched on this a little bit in the previous question, but I kind of wanted to get some more color on what the efficacy bar would be for allosterative in the small cell trial. And I understand you disclosed that you don't want to make, you know, cross trial comparisons. Any color you can shed on how you're thinking about Alcerdib, especially in light of the DLL3 targeting agents that are in development, including Amgen's Tarletamab that has a producer later this year, and Harpoon's Tritac that got taken over by Merck. They had shown some early results in phase one. So just keeping this in the background, I was curious if you could shed some color on how you're thinking about Alcerdib.
spk01: Yeah, so with reference to the DLL3 drugs, you know, Tarlatimab was a third-line drug, so, you know, challenging from that perspective to try to compare a second line and a third line. Also, I would say that, you know, while I recognize response rate is the typical thing people like to do cross-trial comparisons on, you know, as you're aware, you can't just get approval on response rate. You need to actually show a magnitude of that benefit, so a PFS or survival benefit, so I think all of those are gonna be important for us to look at. There is data on Alacertib as a monotherapy that was published in Lancet Oncology previously. And off the top of my head remembering it was like a 20% response rate and somewhere around three month PFS in a non-selected group. So that would kind of be the most, the only data we have for Alacertib as a single agent, if you will. but trying to compare it to other agents, especially just looking at response rates. In small cell lung cancer, unfortunately, you've seen lots of drugs that have got really high response rate, but they can't confirm their clinical benefits because of no increase in PFS or OS. So I think, again, it's going to be really a totality of data where we want to see a response rate improvement, a PFS improvement, and the PFS and the OS Obviously, they're going to be the ones that are going to be more important to us.
spk03: Got it. Thank you, Alan. That's helpful. And then just a quick question again on LSERDA. Have you disclosed what the exact royalty percentages you owe to Takeda if the product's approved, commercialized?
spk01: I do not have that in front of me in terms of our public disclosure. My recollection is we said something in the single-digit range, if I remember correctly.
spk03: Got it. Helpful. Thank you so much.
spk05: Thank you. There are no further questions at this time. I would like to turn the conference back over to Mary Ann for closing comments.
spk06: Thank you all 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.
spk05: 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.
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