Puma Biotechnology, Inc. (PBYI) Q3 2017 Earnings Report, Transcript and Summary

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

Thank you, Sherry. Good afternoon and welcome to Puma’s conference call to discuss our third quarter 2017 financial results. Joining me on the call today are Alan Auerbach, Chief Executive Officer, President and Chairman of the Board of Puma Biotechnology; Steven Lo, Chief Commercial Officer; and Charles Eyler, SVP of Finance and Treasurer. After market closed today, Puma issued a news release detailing third quarter 2017 financial results. That news release, the slides that Steve will refer to and a webcast of this call are accessible via the home page in 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. Before I turn the call over to Alan for an overview of our performance and operations, I would like to point out that during this conference call, we may be making forward-looking statements within the meaning of Federal Securities Laws and based on current expectations, forecasts, and assumptions. Such statements are only predictions, which are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Please refer to the documents that we filed from time to time with the SEC and which are available on our website, including the company’s annual report and Form 10-K for the fiscal year ended December 31, 2016 for information concerning the risks and other factors that could affect the company. You are caution not to place undue reliance on these forward-looking statements, which speak only as of the date of this live conference call, November 9, 2017. The company undertakes no obligation to revise or update any forward-looking statements to reflect the 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, a supplement to, but not a substitute for our GAAP financial measures. Please refer to our third quarter news release for a reconciliation of our GAAP and non-GAAP results. I will now turn the call over to Alan.

Thank you, Mariann, and thank you all for joining our call today. In the third quarter of 2017, Puma achieved an important milestone with the FDA approval and launch of NERLYNX in the United States. NERLYNX is approved and commercially available for the treatment of patients with early stage HER-2 positive breast cancer, who have previously been treated with a trastuzumab containing regimen. In a moment, I will turn the call over to Steve Lo, Puma’s Chief Commercial Officer, who will discuss the launch and commercial progress to-date with NERLYNX. Also in the third quarter, we presented the results for the five-year follow-up from the Phase III trial referred to as the ExteNET study, which was presented at the European Society of Medical Oncology meeting. This data showed that after a median follow-up of 5.2 years, treatment with neratinib resulted in a 27% reduction in the risk of invasive disease recurrence or death versus placebo. Hazard ratio was 0.73 with a p-value of 0.008. The five-year iDFS rate for the neratinib arm was 90.2% and the five-year iDFS rate for the placebo arm was 87.7%. Looking forward, we have several additional milestones that we anticipate for neratinib. This includes reporting additional data from our Phase II CONTROL study on the addition of budesonide or colestipol to loperamide prophylaxis on neratinib-associated diarrhea in patients with HER2-positive early stage breast cancer, which we anticipate will be presented at the San Antonio Breast Cancer Symposium in the fourth quarter of 2017. In addition, in the first quarter of 2018, we anticipate receiving a decision from the committee from additional products for human use also known as the CHMP in Europe on our application for the approval of the neratinib for use in the European Union for extended adjuvant treatment of HER2-positive early stage breast cancer. Also in the first half of 2018, we anticipate the results from the Phase III trial of neratinib in third-line HER2-positive metastatic breast cancer also known as the [indiscernible]. I will now turn the call over to Steve Lo, who will discuss our U.S. commercialization strategy and progress to-date with NERLYNX.

Thank you, Alan. I am very pleased to be able to discuss the initial launch of NERLYNX with you this afternoon. We are off to a good start and look forward to continuing this momentum going forward. First of all, a reminder that during my presentation, I will be making forward-looking statements. Our launch strategy had a two-phase approach in which we would be ready with the commercial infrastructure, specialty pharmacy channel, medical information, reimbursement and the patient services hub at the time of FDA approval. This would ensure we were open for business in a soft launch so that NERLYNX prescriptions would be filled. Also during the launch preparations, we had already recruited, identified and selected experienced field sales personnel with oncology and specifically breast cancer experience who would be hired and trained upon the FDA approval of NERLYNX. This, in fact, occurred and during the month of August we hired and trained 85 clinical sales specialists, 12 nurse educators, and over 20 other field personnel to actively promote NERLYNX starting in September. We are pleased to say the second phase of the launch was also executed as planned and we are fully staffed and have been actively calling on healthcare providers since early September. I will now provide you with our launch results since our FDA approval. On the day of the FDA approval, we received numerous inquiries from both physicians and patients. We received the first NERLYNX prescriptions within three days and our reimbursement and patient services group known as Puma Patient Lynx was able to assist patients and physician offices immediately. We were able to shift commercial drug into the specialty pharmacies within a week and the first patients received commercial drug during that second week. Our launch strategy was to engage all stakeholders, targeted physicians who have HER2-positive breast cancer patients in their practice, nurses who assist with patient support and side effect management, patients, patient advocacy organizations and of course, payers. We set up a network of six specialty pharmacies who provide NERLYNX directly to the patient when a prescription is received. In September, we were able to make NERLYNX available through a specialty distribution channel where the prescription does not need to be sent to the specialty pharmacy. Certain patients can now obtain NERLYNX directly from their physician's office. This allows patients to have direct access to NERLYNX in physician networks such as U.S. Oncology and Ion and also integrated systems such as Kaiser-Permanente. Later in the call, Charles will review the financial results. What I am showing you in slide 7 is the monthly and cumulative net sales for NERLYNX through the month of October. Please note that the revenue chart includes both specialty pharmacy and specialty distribution channels. In the month of July, we had approximately $1 million of initial stocking by the specialty pharmacies. We are very pleased to see the month-over-month sales growth during the initial months of our launch and believe this is indicative of the strong initial demand of NERLYNX. I will now share with you prescription data related to physicians and patients. This is from our specialty pharmacy channel only and does not capture NERLYNX usage through the specialty distribution channel, because we do not receive that prescription data. From the FDA approval through October 31, 779 new patient prescriptions have been received by the specialty pharmacies. We are pleased to see the month-over-month increase in new patient enrollments into the specialty pharmacy network and look forward to this continuing to increase. As a reminder, our sales force has only been out for about eight weeks, so they have not called on every breast cancer doctor in the field. As they continue to do so in the coming months, we anticipate that this will continue to drive new patient enrollments into the specialty pharmacy network. The specialty pharmacies conduct benefit investigations, obtain a prior authorization approval from the insurance company and then arrange with the patient to shift NERLYNX directly to their home. Additional services such as co-pay assistance, medication counseling, anti-diarrheal medications are also offered. Although, NERLYNX is a new oral oncolytic and it is early in our launch, we are pleased to see that the average time from a prescription to obtaining insurance approval and shipment to the patient is approximately 10 days. Most patients receive NERLYNX in 10 days or less, which is a sign of smooth prior authorization and insurance processing. Those patients whose time two insurance approval and shipment are longer, tend to be prescribed NERLYNX for off-label use such as metastatic cancer where the insurance company need more information. I want to remind everyone that we do not promote NERLYNX in the metastatic setting, because that is not an FDA approved indication, but we have received a small number of prescriptions for that use. On Slide 10, you will see monthly and cumulative dispenses to the patients shown as NRx and TRx in the graph. This is growing at a very steady pace since the FDA approval and importantly, we have seen growth in both refills and new dispenses. As you will see on slide 11, where we provide a snapshot as of October 31, you see the 779 prescriptions in the specialty pharmacies as I have previously mentioned, of those 567 patients have received at least one shipment of NERLYNX. 212 patients are in process which means they could be awaiting a prior authorization approval from their insurance company or scheduling a delivery to the patient. At any given time, patients are flowing from prior authorization to approval to delivery. While it is still early in the launch, we are very encouraged to see patients are also receiving their refills in a timely matter. The specialty pharmacies actively reach out to patients during the first month on NERLYNX to counsel them and provide patient support. So far, we have seen 64 patients discontinued NERLYNX, which is an approximately 11% discontinuation rate. This discontinuation rate is lower than the discontinuation rate seen in the ExteNET trial, which would suggest that we are seeing better tolerability in the commercial setting than what was seen in the clinical trials. Importantly, this number is for all patients including metastatic patients, who may discontinue NERLYNX due to reasons other than tolerability, such as disease progression or death. Now on to prescribers, we are encouraged to see that there are 582 unique prescribers as of October 31. The number of prescribers has grown month over month and we are seeing these oncologists prescribe NERLYNX to more patients in their practice. Thus, we are seeing both breadth and depth of prescribers. We have been tracking on a weekly basis the average number of patients that each prescriber has prescribed NERLYNX to, and we are pleased to see that this number continues to increase every week as well. We believe this is a factor of the number of patients coming into the prescribers office who are candidates for NERLYNX. And more specifically, the patients are either finishing their last dose of adjuvant Herceptin or are coming in for their regular physical exams to check for recurrences. Physicians will typically speak to a patient about NERLYNX, when that patient is finishing their adjuvant Herceptin treatment or when that patient is coming in for their checkup. As an example, in a physician practice of a 100 or more breast cancer patients, that translates to 20 patients per year for HER2-positive or one or two a month. Finally, as it relates to prescribers, since our sales force has only been in the field since September we have reached about 30% of the prescribers. We are confident we will be able to reach a 100% in a short amount of time and this will lead to continued growth in our prescriber base. As for patient advocacy, we are pleased to see the support of patient advocacy organizations such as breastcancer.org, home in, Young Survivors Coalition, Living Beyond Breast Cancer, Cancer Care to name a few. These organizations have informed patients via emails and newsletters regarding the availability of NERLYNX. As a result of this, we have received many reports from oncologists of patients coming in and asking for NERLYNX by name. Finally, as for payers, so far, the reimbursement covers for NERLYNX is excellent. More than 90% of lives are covered across Medicare, Medicaid, and commercial insurers. Major insurers have established coverage criteria that mirrors exactly what is in NERLYNX’s broad label. We have not seen any outright insurance denials for NERLYNX in the extended adjuvant setting. We remain committed to making sure all patients have access to NERLYNX regardless of insurance or ability to pay. To summarize, although we are in the early weeks of our launch, we are highly encouraged with the progress we’ve made with physicians, nurses, payers, and patients. We executed the launch of NERLYNX according to plan and now must continue to reach more physicians. We are committed to ensuring all appropriate patients have access to NERLYNX. I will now turn the call over to Charles Eyler for a review of our financial results.

Thanks, Steve. Let me start with a quick summary of our financial results for the third quarter. Please note that I will make comparisons to Q1 of 2017, and Q2 of 2017, as we believe this is a better indication of our progress in becoming a commercial company. For more information, I recommend that you refer to our 10-Q which was filed today and which includes our condensed consolidated financial statements. With the third quarter of 2017, we reported a net loss on $77.2 million or a loss of $2.07 per share. Our net loss for Q2 and Q1 of 2017 were $77.8 million and $72.8 million respectively. Net revenue from NERLYNX sales were $6.1 million with a cost of sales up approximately $1.5 million included in Puma's cost of sales for NERLYNX in the quarter is an amortization of a milestone payment to license or that was approximately $600,000 for the quarter. On an ongoing basis, Puma will recognize as a fixed cost approximately $945,000 each quarter book to cost of sales. SG&A expenses based on GAAP with $32.5 million for the third quarter of 2017 compared to $24.9 million, and $18.4 million for the second and first quarters of 2017 respectively. Non-GAAP SG&A expenses were $24.2 million for the third quarter compared to $17.5 million and $11.1 million for second quarter and first quarter of 2017. The increase in SG&A expenses was primarily due to the increase in staff related expenses, professional fees and travel expenses much of which is related to our product launch in July. Research and development expenses based on GAAP were $49.5 million in the third quarter compared to $53.3 million and $54.8 million for second and first quarters of 2017 respectively. On a non-GAAP basis, R&D expenses were $31.3 million compared to $33.7 million and $32.3 million for the second quarter and first quarter of 2017 respectively. Our net cash used in operating activities for the third quarter of 2017 was approximately $55 million compared to $46 million and $36 million for Q2 and Q1 respectively. Approximately, $4 million of this increase from Q2 to Q3 represents an increase in receivables and inventory. In addition, we received approximately $10 million in cash from the exercise of employee stock options. This resulted in a cash burn of approximately $45 million for the third quarter compared to a cash burn of $42.2 million and $35.6 million for Q2 and Q1 respectively. We ended the third quarter with $106.3 million in cash, cash equivalents and marketable securities. In October 2017, we secured a term loan of a $100 million subject to funding into two tranches. The first tranche of $50 million which was received on October 31 will be used for general corporate purposes, and to support NERLYNX commercial activities. The second tranche of $50 million may be drawn at Puma’s option and are subject to the achievement of certain milestones. The loan will mature on October 31, 2022. Overall, we continue to deploy our financial resources to focus on the advancement of neratinib through ongoing clinical trials and the commercial illustration of NERLYNX in the United States.

Thank you, Charles and Steve. With the U.S. approval and launch of NERLYNX in the third quarter, we began providing early stage HER2-positive breast cancer patients with an additional option to reduce their risk of disease recurrence. We are pleased with the feedback that we have received from patients, prescribers and payers during the initial launch. And we look forward to continuing to execute our commercial activities throughout the remainder of 2017, and beyond. 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. [Operator Instructions]. Our first question is from Our first question is from Cory Kasimov with JPMorgan. Please state your question.

Hey, guys. Congratulations on the quarter. This is Sean on for Cory and thanks for taking my question. So, at this point, can you guys maybe say what percentage of prescriptions are coming from the academic setting versus the community setting? And are there any early trends that you guys can point to in regards to prescriber behavior, are there any groups that are more likely to prescribe to more than all comers population others that tend to be kind of more discriminating of the data as it relates to say for example receptor positivity?

Yeah. So, we’ve mostly seen use of NERLYNX in the community setting. Yes. I think you know that’s where the majority of the prescribers are, I think it’s 85% or 90% of them and that’s definitely where we’re seeing the uptick. In terms of hormone receptor positive or hormone receptor negative, etcetera, we’re seeing it across the board. We’re definitely seeing some physicians just using it in certain patient groups, but we’re also seeing them treating just according to the label, according to the ITT basically, so all comers.

Okay. Great. And in just these initial couple of months of launch, do you guys have any insight in regards to how many of the patients treated so far were kind of in that group that were beyond the two years’ post your last Herceptin treatment that were included in the ExteNET trial, trying to just kind of figure out if there are some sort of bolus affecting in this group that’s further out and I kind of maybe I’m looking at July and it seems the numbers were higher in that one, so just kind of wondering if there were some of that going on? Thanks.

Yeah. So, we look at it as there’s three patient groups that can be treated with NERLYNX. One of the ones, where they’re coming off their 12 months 12 months of Herceptin and they're being sequenced directly onto NERLYNX. The second group are the ones where they perhaps completed their adjuvant Herceptin six months ago or a year ago and they're coming in once every six months for the physical exam where the doctor is physically checking them for you know any evidence of recurrence and that's when the doctor is discussing NERLYNX with them at that time. The third are the ones where you know these are patients where perhaps they're not coming in as frequently for their physical exams. They completed adjuvant Herceptin four years ago or more. And again, that's another discussion that the physician wants to have. We have certainly heard from physicians that a number of them are indeed calling back their patients, especially from you know four years ago, five years ago, et cetera., I don't know, if we start to see that yet. I think we are seeing it in the first two buckets, you know which is the patients coming directly off adjuvant Herceptin and those who may have finished it three months, six months, nine months to go, et cetera. So, I think we still have that you know those two to continue to penetrate and then also the ones from further out as well. In terms of the bolus as you described it in July, most of that bolus that you're referring to in terms of sales was just the initial stocking. I think as Steve mentioned, we had about a $1 million or so which was just the initial stocking. So, if you look at the monthly net in July was you know little over $2 million, about a $1 million of that was just the initial stocking. So, I think that probably worked itself off through demand in August, through August, September, October you were probably seeing pure you know pure demand driven sales.

Okay. Great. Thanks. And congrats again.

Our next question is from Alitalia Young with Credit Suisse. Please state your questions. Please state your question.

Hey, guys. Thanks for taking my question. Congrats on the progress so far. A couple from me. One, can you talk a little about the gross to net, I think I missed that, if you had in the script. What -- that’s kind of tracking at and what that expectation should be? Also do you have a quantitative number for the percentages were like metastatic? And then my last question is just can you talk a little bit about anecdotally what you're seeing with the diarrhea management in the real world or are they using loperamide, or are they using other regimens, any color you can give on that? Thanks.

Thanks, Alethia. Okay. On the gross to net – our gross to net is about 14%. I don't know if Charles mentioned that in his speech. So, I apologize if he didn't. Our gross to net is 14%. In terms of the percent of patients who are metastatic, it's running roughly around 5% of the patients treated. So, it's definitely the minority of the patients and the majority are in the indication of the extended adjuvant. In terms of your last question, which is very good in terms of what exact regimens docs are using to manage the diarrhea, we really don't track that, so we unfortunately don't have any real insight. We hear anecdotally that some physicians are starting them with loperamide, and then if there's diarrhea they're using either budesonide or colestipol as kind of a rescue medication. We're hearing others who are saying that some of them are using the combinations of loperamide/budesonide, loperamide/colestipol et cetera. So, we don't really get the exact regimens that we're using. Remember that in the community, a lot of these docs don't just treat breast cancer, they also treat other solid tumors as well. So, they can treat colon cancer or they can treat lung cancer and things like that. So, they can treat color cancer or they can treat lung cancer and things like that. In colon cancer, as you know, irinotecan, Camptosar is used quite frequently, and there you have to be very aggressive in prophylaxing the patients with loperamide, so that knowledge is probably helping in the management of the diarrhea with NERYLNX. On the lung cancer side, you know, afatinib which I believe is called Gilotrif from Boehringer Ingelheim it's very similar to neratinib in the fact that it's an oral drug that's a irreversible pan-HER inhibitor has a very similar diarrhea characteristics to neratinib, which is you know Grade 3 diarrhea that happens up front. So, again I think the docs probably have knowledge of managing that which is probably helping with the management of the diarrhea with NERYLNX.

And then just a follow-up to that. I know in Steve's comments, he mentioned that you know, he was saying potentially better tolerability in the real world, just wondering if you can unpack that? Thanks.

Yes. This is Steve. So, understand that in the commercial setting, we have specialty pharmacies in place. And so, as soon as a patient is on the medication, the specialty pharmacies call and remind the patients to take their loperamide if it's prescribed. In these community practices, we've also educated -- our nurse managers have educated the nurses into practice, and so the nurses also provide great instructions to the patients before they're on the medication. And then finally as well, the specialty pharmacies will follow-up with calls to ensure that they're adhering to the medication and believe in have things such as text reminders.

And Alethia, also realized from a numbers perspective, I believe in ExteNET, the number of patients who discontinued taking neratinib was somewhere in the range of like 20% to 27%, I think it was 20% due to diarrhea, like 6% or 7% just due to patient due to patient request, meaning they probably you know may have had diarrhea or some other GI discomforts. So, all in, discontinuations were somewhere in like that you know 26%, 27% range. Commercially right now, as Steve mentioned, we’re seeing it at 11%. So, that appears – again, it’s early, we’re monitoring this, but it appears right now – it appears to be lower than what we’ve seen in accident.

Great. Thank you guys.

Our next question is from Yigal Nochomovitz with Citigroup. Please state your question.

Hi Alan and team. Congrats on the first quarter of sales. A few questions here. Number one, were there any patients in the EAP program that are reflected in the rollover commercial in the numbers you are reporting? Second, are you planning to give fiscal year 2018 revenue guidance? And then third just overall on the market, I think one of the numbers that a lot of folks are using is the 36,000 adjuvant Herceptin patients per year in the United States, sort of the funnel for NERLYNX. But I’m just wondering if you have a more updated number since I think that one might be a bit out of date? Thanks.

Hey, Yigal. Let me go through your three questions. So first of all, on the EAP, we had – did not do anything to try to convert the patients in the expanded access program over to commercial supply. You know a lot of those patients came in six months or so ago and we really didn’t do anything to try to force them into commercial supply. I don’t know that we have had any converted over, Steve is shaking head no. I don’t think we have had any who converted over. So, we’re just continuing to give them through the EAP. On your second with regarding guidance, no early in the launch of the drug we are not providing any revenue guidance either quarterly or annually. Once we get a little more experienced with the sales we may do that at a later date, but we did not give any guidance for the third quarter, we're not giving any for the fourth or the fiscal year 2017. And we're not getting any for 2018 at this point. If we change that we'll obviously communicate that to investors. Regarding your last question which is the number of patients on adjuvant Herceptin. The 36,000 number it probably the best one to go with. The only caveat I would make is that you know if you look at the Herceptin curves from any of the Adjutant trials there is a percent of patients who do have disease recurrence in that first year. So, you probably and I don't think it's very high it's probably in the low to mid-single-digits. You probably need to just take whatever that -- whatever three, four, five percent out because if they recur obviously they become static and that wouldn't be applicable to the success management population.

All right. And sir, that – we actually do that in our model. And then one other things if I could just follow up. Of the 64, that discontinued do you have any senses to what percentage of those were metastatic, as Steve mentioned?

I think, he was only a few cases, again the metastatic business is as Dale mentioned less than 5%. So, but certainly to once you discontinue it I can say that metastatic lender are reflected in that number.

Got it. Thank you.

Our next question is from Michael Smith with Leerink Partners. Please state your question.

Hey guys, thanks for taking my questions, and congrats on getting NERLYNX on the market, something that we market. Something that we've seen with a handful of other drug launches in the oncology space is that, companies in some cases, sort of, covering patient assistance programs by giving away free drug as much as 20% or 30% of demand. Is that something that, that you've been encountered to so far in the launch?

Yeah. So, thanks for your question, Michael. With regard to patients who don't have insurance and therefore, you know, we provide them with free drug, we do indeed do that. So far, that's only been about 5% of the patients. It has not -- I'm aware, you've seen other companies and I've seen them as well, where that number gets up to like 20%-25%. We have not seen that in this patient population, so right now it's about 5%.

Great. Do you have any, any sense of how much of your target patient population is Medicare/Medicaid?

About 10%.

Okay. Perfect. And, I have a balance sheet question actually and this relates to the Pfizer milestone payments that are due at some point. Can you just provide some information on the amount and timing of those milestone payments, when they are potentially going to be due? Thanks.

Yeah. So, our public guidance on that is that, there is $187 million in milestone payments that will be paid to Pfizer. That includes, regulatory milestones, when we get approval in certain territories and then there's also sales based milestones. We've not given any indication or any guidance on how much those are or when they're paid, you can assume the regulatory ones would be paid upon the approval you can assume the regulatory ones would be paid upon the approval in various countries. The sales once you know, you can imagine there’s, there are certain revenue thresholds and when we hit them, they would be a onetime payment. So, you know, you can kind of just manage that to your own expectations.

Great. Well, thanks for taking my question and congrats on the launch.

Our next question is from Chris Shibutani from Cowen and Company. Please state your question.

Great. Thank you very much. Two questions. One, on the work that you're doing in the prophylaxis regimen. You said we'll see some more data at San Antonio and it sounds as if that was one of the gating factors that you said to the European filing. Have you submitted that information and is that underlying your confidence in the first quarter European timing and also are you submitting that information for a label update in the U.S. And if so, when might we see a label update in the U.S. to include those additional regimens?

So, the CONTROL data will be updated at the San Antonio Breast Cancer Meeting. It will include more patients in the colestipol arm specifically. That data will be submitted to the EMA as part of our response to the 180-day questions. Once we send that to the EMA, they will then respond back to us in the first quarter of 2018 and their response will be – from the CHMP will either be a recommendation for approval or a recommendation for not approval or they can take it to an oral hearing, which is similar to the FDA’s version of ODAC or they can issue another list of 180-day questions. We are planning at some point to submit that for an updated label to our currently marketed label with the FDA that would probably occur sometime in 2018 and when we get better clarity on that, we’ll communicate that to investors.

And I think we’re deep enough into Q&A where I can ask the question about your strategic optionality thinking, obviously with a potential European approval or a commercial partner would be the logical path, I think you said that previously Alan, as well as thinking about the scope of opportunity for this drug worldwide including the U.S. sales, you plan to sell in the U.S. Update us on your thinking with regard to other partners or strategic options. Thanks.

Yeah. So, the company doesn't provide any guidance or commentary regarding discussions with strategics, partnering or mergers and acquisitions.

Then on outside the U.S. commercialization.

Outside the U.S. commercialization, I think we have one of three options. One is we can do it ourselves. One is we can decide to partner with another company or if we choose to take the path of selling the entire company that would obviously be part of it. Today is not the day we're making that decision, but when we do make that decision we'll do it in the best interest of investors.

Thanks for letting me ask the question.

Our next question is from [Ian Hanks] with Bank of America. Please ask your question.

Hi. Good afternoon. Thanks for taking the question. Alan, maybe can you confirm that all the script numbers you just provided in the slide deck is from the specialty pharmacy channel, do you have any other channel and if there is how big was that number? And then secondly, can you talk a little bit more about the formulary access, do you expect in 2018 you might have better coverage in terms of a formal coverage and tier status, what's a typical co-pay for a patient on earnings now?

Okay. Hi, this is Steve. I will take the – your questions regarding formulary status, as well as your question around what’s outside the specialty pharmacy channel. So, as I talked about in my remarks, patients are either in the specialty pharmacy channel or the specialty distribution channel where they can receive NERLYNX in the office of the physician. Right now, we have greater than 95% of our business in the specialty pharmacy channel. So, I would say the specialty distribution channel is fairly small if you were to model that. Secondly, in terms of formulary status, remember this is an oral oncolytic, it’s not really competing with another product that would displace it. So, formulary status isn’t really the game with the payers here, it’s ensuring that the product clears through the prior authorization. And as I’ve stated before, we have had no problems with getting NERLYNX reimbursed in the extended adjuvant setting. And your final question was around co-pay. So, one of the things that we’ve done in our commitment to access for patients is, we have a co-pay assistance program where like other companies, we help patients with their co-pay. And in this case with NERLYNX, patients pay no more than $10 on their co-pay. And we found that to have been very successful and that is one of the reasons why you see patients getting – most of these patients getting on drugs in 10 days or less.

Great. Thank you.

This concludes our question-and-answer session. I would like to turn the conference back to Mariann for closing remarks.

We appreciate your interest in Puma Biotechnology. As a reminder This call may be accessed by a replay of the webcast at pumabiotechnology.com beginning in about an hour. Thank you again for your time and attention today.

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