Ladies and gentlemen, good afternoon. My name is Adam, and I will be your conference call operator for today. At this time, all participants are in a listen-only mode. After the speakers' formal remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this program is being recorded. I would now like to turn the conference call over to Mariann Ohanesian, Senior Director of IR for Puma Biotechnology. Thank you. You may begin your program.

Thank you, Adam. Good afternoon, and welcome to Puma's Conference Call to discuss our financial results for the second quarter of 2018. Joining me on the call today are Alan Auerbach, Chief Executive Officer, President and Chairman of the Board of Puma Biotechnology; Steve Lo, Chief Commercial Officer; and Charles Eyler, our SVP of Finance and Treasurer. After market closed today, Puma issued a news release detailing second quarter 2018 financial results. That news release, the slides that Steve will refer to and a webcast of this call are accessible via the home page and Investors 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 will make forward-looking statements within the meaning of federal securities laws. All statements other than historical facts are forward-looking statements and are based on our current expectations, forecasts and assumptions. Forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from the anticipated results and expectations expressed in these forward-looking statements. These risks and uncertainties are identified in our Annual Report on Form 10-K for the year ended December 31, 2017, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 and any subsequent documents we file with the SEC. 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 9, 2018. 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 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 2018 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. We are pleased to report that sales of NERLYNX, Puma's first approved drug, have continued to grow steadily since launch. NERLYNX was approved by the U.S. FDA in July 2017 for the treatment of patients with early stage HER2-postive breast cancer, who have previously been treated with a trastuzumab containing regimen. Today we reported NERLYNX net sales of $50.8 million for the second quarter of 2018, which represents a sequential increase of 41% from the $36 million in sales reported in the first quarter of 2018. In a moment, I will turn the call over to Steve Lo, Puma's Chief Commercial Officer, who will provide an update on NERLYNX launch-related activities and detail our commercial progress in the U.S. to-date. In June of 2018, the Committee for Medicinal Products for Human Use, also known as the CHMP, adopted a positive opinion recommending marketing authorization for NERLYNX for the extended adjuvant treatment of adult patients with early stage hormone receptor positive HER2-overexpressed/amplified breast cancer, who are less than a one year from the completion of prior adjuvant trastuzumab-based therapy. The CHMP recommendation will be reviewed by the European Commission, which has the authority to approve medicines for the European Union, and we expect a decision this quarter. In July, we announced that Health Canada had accepted for review our new drug submission or NDS for NERLYNX for the extended adjuvant treatment of adult patients with early stage HER2-overexpressed/amplified breast cancer following adjuvant trastuzumab-based therapy. The NDS has passed the mandatory validation period by Health Canada, the country's federal regulator for drugs and health products and has now entered the review period. We look forward to working with Health Canada during the review of our submission. We also anticipate submitting…

Thank you, Alan. NERLYNX has now been in the U.S. market for a year since our FDA approval in July of 2017. Since then, thousands of patients have been prescribed NERLYNX. We had another good quarter of steady growth and look forward to continuing this momentum. As we are a year into our launch, we continued to be focused on the execution of reaching more patients and physicians. As such, the key performance indicators of our progress are primarily directed at the number of active patients on NERLYNX, ensuring patients have access, keeping patients on NERLYNX and educating more physicians. A reminder that during my presentation, I will be making forward-looking statements. As you may recall, our network of six specialty pharmacies provide NERLYNX directly to patients. The specialty pharmacies conduct benefit investigations, obtain a prior authorization approval from the insurance company, and then arrange with the patient to ship NERLYNX to their home. We also have a separate specialty distribution channel where the prescription does not need to be sent to the specialty pharmacy. This helps to facilitate the ability for certain patients to obtain NERLYNX directly from their physician's office, integrated health systems and also the VA. In addition, our Puma Patient Lynx Health Services help patients with co-pay and financial assistance and provides physician offices with reimbursement support. Later in the call, Charles will review the full financial results, but I will now provide you with the current sales results. On slide 4, you see quarterly net sales of NERLYNX since FDA approval. As Alan mentioned, we had another quarter of steady growth with net revenue at $50.8 million in the second quarter, an increase of 41% from the prior quarter. This growth was a result of more patients being prescribed NERLYNX and staying on their medication…

Thanks, Steve. Let me start with a quick summary of our financial results for the second quarter of 2018. Please note that I will make comparisons to Q1 2018 and Q4 2017, which we believe are better indications of our progress in becoming a commercial company than year-over-year comparisons. For more information, I recommend that you refer to our 10-Q, which was filed today, and which includes our consolidated financial statements. For the second quarter of 2018, we reported a net loss based on GAAP of $44.3 million or $1.17 per share. Our GAAP net loss for Q1 2018 and Q4 2017 were $24.3 million and $64.1 million respectively. On a non-GAAP basis, we reported a net loss of $22.2 million or $0.59 per share for the quarter. As Alan and Steve mentioned, net revenues from NERLYNX sales were $50.8 million versus $36 million for the first quarter. Our cost of sales for the second quarter was $8.8 million, which includes the amortization of milestone payments to the licensor of approximately $0.9 million. Going forward, we will continue to recognize amortization of the milestone payments to the licensor $0.9 million per quarter as cost of goods sold. For fiscal year 2018, Puma continues to anticipate that NERLYNX net revenues will be in the range of a $175 million to $200 million. This guidance includes the majority of the revenue coming from the currently approved extended adjuvant indication only. We recognized that there are a number of factors that Steve mentioned in his presentation, such as patients who stay on NERLYNX for more than 12 months and patients who delayed starting NERLYNX until after summer that could result in us needing to revise our revenue guidance for the year. As it is a bit too early to quantify the impact of…

Thanks, Charles and Steve. Since we launched NERLYNX for the treatment of early stage HER2-positive breast cancer in the third quarter of 2017, we have continued to receive positive feedback from patients, prescribers and payers. We will continue to move forward with our plan to advance and expand our commercial activities for the balance of 2018 and beyond. This concludes today's presentation. We will now turn the floor back to the operator for Q&A. Operator?

Thank you. Ladies and gentlemen, we will now be conducting our Q&A session. [Operator Instructions] Our first question comes from the line of Cory Kasimov from JPMorgan. You are now live.

Hey, good afternoon, guys. Thanks for taking my questions. A couple of them for you. I guess first one, I wanted to ask about the monthly trend. So, the net monthly patient data you provided this afternoon is definitely helpful and also encouraging. I was wondering if you could also describe the monthly new patient starts and how that's been trending since you had that previously disclosed dip in early April.

Yeah. Cory, thanks for the question. So, I don't have that data in front of me. So, I don't - can't really comment on it. What I would say is the monthly numbers you're seeing in that chart is basically existing patients plus new patients minus discontinuations.

Okay.

So, that's [ph] until now. One of the reasons we did that is we were hearing from a lot of investors, you're giving us lots of metrics, but what we really just want to know is how many patients are taking the drug every month. And obviously, you could have for example, a month where 200 patients sign up with the specialty pharmacy, but a 150 discontinue, so your net add is only 50. So, we felt it was more appropriate and much more helpful to investors to give them a more live model if you will, which shows basically every month. Again, it's the patients who are continuing to take the drug plus new patients minus discontinuations and it includes both specialty pharmacies and the specialty distributors.

Okay. So, seeing what looks like - I mean the slide went by pretty quick, but what looks like an acceleration in the July numbers over what have been months even before that should be a promising signal. Okay. And then another question I had is that you said I think 63% of target prescribers have been reached, does that mean that you've detailed them or that they are prescribing drug. I guess at this stage, are there any one or two specific issues that might be keeping prescribers on the side lines?

Yeah. This is Steve. I'll answer that. Those are the physicians, the 63% of our target, which we've actually been in front of and we've detailed. And ultimately it foils down to the same discussions that physicians will undertake, which is benefit versus managing the side effects. It's been really positive given the diarrhea management options that we can now talk to them about. And then the rest, essentially as I mentioned earlier, in the oncology audience, there is a lot of physicians that don't see sales reps now. So, we look to access them in conferences and other venues.

Okay. And then if I could [ph] slip one more in. Given the sequential 41% increase in sales this quarter, I'm curious if there is anything specific that you might be worried about or any issues we should be thinking about as we head into the fall that prevents you from raising guidance at this point, are you just trying to be stay conservative on that?

I think we're trying to stay conservative on that, Cory. I think when we - as you know, when we first put out our revenue guidance earlier this year, we stated we were being conservative, and I think that's where we are more comfortable. But I think we just like to get, as Charles mentioned, there is a lot of metrics that we'd like to get a little more quantitative meat on the bone if you will before we start looking into any changes to the guidance.

Okay, perfect. Thanks for taking the questions.

Sure.

Thank you. Our next question comes from the line of Yigal Nochomovitz from Citi. Your line is now live.

Hi, guys. Thank you very much for taking the questions. With regard to the split on the specialty pharmacy versus the in-office dispensing, Alan, do you have any color on how that program is working in terms of patients receiving drug in the office?

I believe Steve said that about 12% of the patients are receiving the drug through the specialty distributors, which is the in-office dispensing. But we also, as Steve mentioned, we get patients who bounce back and forth, meaning that sometimes they will get it from the pharmacy and sometimes they will get it from the specialty - from the in-office dispensing. The 12% is kind of an average. We've seen it go as high as 15% in any given week or month, but on average it's about 12%. And again, the error bars around that are that we do get patients where sometimes they will get from the pharmacy and then sometimes they will get it from the in-office.

Okay, great. And then, regarding the 63% of target prescribers that you reached in 2Q, am I hearing you right, there is essentially the remaining 37% are just not eligible for being detailed because they won't be seeing reps, or have you sort of plateaued on that effort on the detailing front?

Not necessarily. This is Steve. Not necessarily that we've plateaued, I think there are more opportunities to access these physicians. Recently we've entered into a nice partnership with Ion [ph] which is a large group purchasing organization which has now allowed us access to those sites, we're actually in the process of working with other large physician groups. So, definitely not have plateaued, but certainly the way I look at it, there is still a lot of opportunity in front of us.

And can you speak to some of the practices that those physicians are using in terms of any early dose titration just to get patients comfortable with the profile of the drug? And also, what types of diarrhea prophylactic regimens have been most effective thus far from the commercial setting?

Okay. So, in terms of diarrhea management, I think the most common one we see is just using loperamide largely because that's kind of the go to drug if you will for both preventing and treating the diarrhea for many cancer drugs not just NERLYNX. We do find that the docs who are using Colestipol tend to give very favorable feedback of that and we tend to see them having a much better success rate if you will. And one of the things that Steve and his group have been very focused on is raising awareness of that Colestipol data because as of yet it's not in our label, and so, we need to raise awareness via other ways. You also mentioned the dose titration and dose escalation. We are aware that physicians are indeed doing this. And just to give a little history of this, neratinib mechanism of action is it's an oral irreversible tyrosine kinase inhibitor that is a pan-HER inhibitor. There is another drug, afatinib, which I think is called Gilotrif sold by Boehringer Ingelheim, which is approved for lung cancer and it is also similar to neratinib in oral drug that is an irreversible pan-HER TKI. With afatinib, a lot of the docs have been very successful and afatinib has the exact same profile as neratinib in terms of causing Grade 3 diarrhea, it's all in kind of the first month and then the incidents of that diarrhea goes away over time. A lot of docs in lung cancer have been very successful from what we understand in doing a dose titration with afatinib where they kind of start at a low dose and then titrate up to get to a full dose. We are aware, again we don't market for this, this isn't something we recommend, it's just you have a lot of community doctors who treat lung cancer and breast cancer, so they have this domain knowledge if you will from using afatinib. We are aware of a number of docs who are indeed doing this where they titrate the dose of NERLYNX in the first month and they're apparently having a much better success rate by doing this. We are indeed in our CONTROL trial, which is our Phase II trial looking at prophylaxis, we do indeed have a cohort right now where we're actually studying this in control using a dose titration or dose escalation where we'll be hopefully able to see how successful this is, but we are aware it's happening in the field. I don't know to what percent, but we know this from feedback from physicians and also as you know there is a lot of these online videos that physicians post talking about their experience with drugs and there have been online videos as well where docs have said I'm doing this and I'm having a much better success rate.

Okay. That's very helpful. And then, just Alan, on the financials, I think you mentioned in the script regarding being cash flow neutral to positive by the fourth quarter, what about on an EPS basis, is that something you can talk about?

I don't think we can yet talk about when we would be EPS profitable. We'll need to get back to you on that.

Okay. Thank you.

Thank you. Our next question comes from the line of Ying Huang from Bank of America Merrill Lynch. You are now live.

Hey, thanks for taking my questions. Maybe on the new patient adds, Alan, can you just talk about even the trends for the last three months in terms of new patient adds. I know it will be difficult for to do the math given now you're changing a little bit the way to report to the net patients on the drug? And then secondly, it seems August of last year, some patients will start to roll off the therapy if they don't get treatment beyond 12 months. Do you think potentially you might see a slowdown in fourth quarter if that's a dynamic?

So, Ying, to answer your first question, as we said in the earlier comment, again, the graph that you're seeing is basically patients who are continuing to take the drug plus new patients minus discontinuations, it's a net number. So, again, I don't have the new patient starts numbers in front of me, so I can't comment on this. I will just direct you to that graph. In terms of the patients who are becoming available for their 12 months of therapy and do they continue beyond the year, which Steve mentioned we're already seeing or do they discontinue, we're obviously very encouraged that we're seeing patients continuing to take the drug beyond one year. Again, we don't have a huge number of patients, as you can see in the graph, we don't have a huge number of patients who have yet become available to be either make that decision of completing their 12 months of therapy or going on for a longer period. But having said that, we're very encouraged with the percent of patients who are continuing. I think that them continuing beyond one year is really the patient's desire to do everything they can to prevent the recurrence. And Steve, if you'd like to comment, this is not the first time something like this has been seen.

Yeah. So, I'll add a few other comments in addition to Alan. So, first on the new patient starts. When we reported those in prior quarters, please also note that was only from the specialty pharmacy channel. So, we were only showing you a portion of the new patient starts. We don't receive that information on the specialty distribution channel. And that's why from our perspective, providing you the net number of active patients is really the key performance indicator for us. On the second, I have related to duration, I can tell you as I mentioned earlier on the script, we do have patients who although a small cohort have reached their year, they are staying on for a variety of reasons, one is essentially this is their last option before a recurrence can occur. When I used to work on the drug Herceptin, which was also with an indication for a year, there were many patients who did not want to go off the drug after a year of adjuvant treatment. So, again, this is early in our launch, I think we need to look at the metrics, and we may have more clarity as we see more patients reach one year.

Got it. Thank you. And if I may, do you guys have any idea about roughly the percentage of patients who are actually on NERLYNX off-label, either brain met patients or other metastatic breast cancer patients?

Yes. We did receive that data from the specialty pharmacies only, so I understand that. And we're noticing about 5% of the prescriptions are for off-label.

Great. Thanks for the color.

Sure.

Thank you. Our next question comes from the line of Kennen Mackay from RBC Capital Markets. Your line is now live.

Hi. Thank you. Thanks for taking the question, and congrats on the quarter. Wondering, maybe if you could expand a little bit on the rationale behind the patients who do continue beyond a year and any sort of sense as to sort of what percentage of patients we could really expect to be, this is going to obviously going to be a big factor relating to sort of compounding in the second half of 2018. Thank you.

now that they've reached a year t:

Yeah. So, Kennen, if I can add to that. So, first of all, remember that these are early stage breast cancer patients. So, if I remember correctly, the average early stage breast cancer patient is somewhere around 40 years old. So, if cancer - that's young. And as Steve said, these are young women who have chosen and they want to watch their babies grow up and produce their own babies. So, they want to do everything they can to prevent recurrence. And also, taking on what Steve said, remember with NERLYNX, the side effects all tend to be front-end loaded. So, the time these patients are getting up to month 9, month 10, month 11, you're not really seeing the side effects that you saw in one, so their tolerability is much, much better. So, again, as Steve said, you can look at the graph we have on slide 5, there is 2,076 patients as of July 2018. The first two in the July, August, those will be the ones who would be available for future - for continuing and beyond one year. So, that net-net is less than 5% of all of our patients. So, we don't have this type of metric on 20% or 30% of the patients, but we are encouraged with the percentage we are seeing. So, if that continues and continues to hold at the current percent it is, it's certainly can be meaningful, and that percent can certainly go up as well, but it can certainly go down too. So, I think we just want to wait a little bit longer just to get another quarter under our belt here and then we can have a much better idea how to influence our revenue guidance for that.

Got you. Thanks, Alan, and apologies Steve, I'm trying to multi-task on calls here and failing miserably. And one final housekeeping question here. Just wondering gross to net versus Q1 and whether there was any inventory that influenced the quarter, I know that hasn't been an issue in the past, but just housekeeping? Thank you very much for taking the questions.

So, our gross to net adds actually came down. We're looking at a range in the 10% to 11.5%. Again, in the beginning, being a new company with no experience, we were running a little conservative on the high side.

And Kennen, on your question of inventory, I believe Charles…

On the inventory, our inventories stayed extremely low. Again, we're burning off inventory that was manufactured prior to approval. So, one of the metrics I look at is what inventory do we have sitting on our SP shelves, which is about three weeks supply.

Got you. Thanks again.

Sure.

Thank you. [Operator Instructions] Our next question comes from the lines of Chris Shibutani from Cowen. Your line is now live.

Thank you very much. Alan, in the U.S. I believe the FDA label enables patients to be taking NERLYNX without a particular restriction on when in relation to when they had the Herceptin, unlike I believe, what I think the guidelines of the European regulators were talking about. Are you seeing that there are patients in the U.S. or coming perhaps more than two years out, four year out after they completed their Herceptin, kind of what's the mix? And my second question would be, if you could give us a little bit more dimension on the discontinuation, we have kind of an average discontinuation rate. In that regard, can you maybe comment whether that percentage number represents just more of a contribution from folks who really stopped earlier in the course, averaged out over kind of bimodal distribution as in patients who continued. Just trying try to understand that number really means underneath? Thanks.

Yeah. So, Chris, on your first question. So, our label for NERLYNX in the U.S., although you're correct, it doesn't specify a time limit as to when - from when they've completed Herceptin, remember that the ExteNET trial, which is our Phase III trial, patients were up to two years. So, I don't think any physician would be comfortable going out to like 3, 4, 5, et cetera just because we don't have the data. I think the large majority of our patients in the U.S. are within that first year. I don't think we've seen a huge percent of them coming from that kind of one year to two year period. So, I think that the label in Europe is going to cover from a time perspective the majority of the patients we are now treating in the U.S. On your second question, we tend to see the majority of the discontinuations with the drug upfront, and largely that's due to the tolerability in the diarrhea. And that's similar to what we've seen in the ExteNET trial where the discontinuation rate was kind of highest in that first month. And I believe we've also seen something similar in the CONTROL trial where the discontinuation rate is the highest in the first month. So, I believe that's what we have been seeing commercially as well.

And then if I could follow up over in Europe, it sounds like you're able to make some progress and what you've described is the commitment to building out some of your own infrastructure there. Can you help us understand how you're balancing out potential for partnership? I know that outside of Western Europe, Rest of World, there are some regional partners that you've already announced. But particularly for Western Europe, now that the CHMP process has moved out favorably for you, are you committed to developing your own infrastructure and kind of go direct as your primary approach at this stage and what the cost implications might be as we think about our model?

So, I think obviously, first we have to wait for the approval. But I think that we are moving forward with building our own infrastructure, but certainly our commitment is to the shareholders. And if something came up from a partnership perspective that was attractive, we could certainly evaluate that as well. But I think at the present time, our goal is to build it out ourselves. And again, we need to wait for the actual approval and the timing of that. And I think at that point, we can probably have a better idea of what the financial implications would be in terms of build-up.

Great. Thank you for all questions.

Thank you. Ladies and gentlemen, that is all the time we have for our Q&A today. I would like to turn the call back over to management for closing.

We appreciate your interest in Puma Biotechnology. As a reminder, this call maybe accessed via replay of the webcast at pumabiotechnology.com beginning in about an hour. Thank you for your time and attention today.

Thank you. Ladies and gentlemen, this does conclude our teleconference for today. You may now disconnect your lines at this time. Thank you for your participation. And have a wonderful day.