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

Thank you, Doug. Good afternoon and welcome to Puma’s conference call to discuss our financial results for the third quarter of 2019. Joining me on the call today are Alan Auerbach, Chief Executive Officer, President and Chairman of the Board of Puma; and Maximo Nougues, Chief Financial Officer. After market closed today, Puma issued a news release detailing third quarter financial results. That news release, the slides that Alan 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. 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 annual report on Form 10-K for the year ended December 31, 2018, and any subsequent documents we file with the U.S. Securities and Exchange Commission. 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, November 6, 2019. 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 third quarter 2019 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. Today Puma reported total product revenue for the third quarter of 2019 of $53.5 million. Total product revenue consisted of product revenue for sales of NERLYNX. Net sales of NERLYNX were $53.5 million in the third quarter of 2019, a 0.6% decline from the $53.8 million in net sales reported in the second quarter of 2019. I will begin with a review of some of the highlights of the quarter and then provide some more detail on the NERLYNX commercial activities in the U.S. Maximo Nougues will follow with highlights of the key components of our financial statements for the third quarter of 2019. In July, we announced that our licensing partner in Canada, Knight Therapeutics, received marketing authorization from Health Canada for NERLYNX for extended adjuvant treatment of adult patients with hormone receptor positive, HER2 positive early stage breast cancer following completion of adjuvant trastuzumab-based therapy. In September, we announced that our licensing partner in Latin America, Pint Pharma, received their regulatory approval in Argentina for the same indication. Earlier this week, we announced that our licensing partner in Greater China, CANbridge, received marketing approval in Hong Kong. According to the terms of the licensing agreement with all three of those entities, Puma will be receiving royalties from the sales of NERLYNX in those territories once they are commercialized. In collaboration with our licensing partners, we also anticipate announcing additional regulatory decisions on neratinib in additional countries outside of the United States and Europe in the remainder of 2019 and in 2020. As investors are aware, in the second quarter of 2019, we presented the results from our Phase III trial of neratinib in third-line HER2-positive metastatic breast cancer, also known as the NALA trial at the…

Thanks Alan. Let me start with a quick summary of our financial results for the third quarter of 2019. Please note that I will make comparisons to Q2 and Q1 2019 which we believe are better indications of our progress as a commercial company than year-over-year comparisons. For more information I recommend that you refer to our 10-Q which will be filed tomorrow and includes our consolidated financial statement. For the third quarter of 2019 we reported a net loss based on GAAP of $16.9 million or $0.44 per share. Our GAAP net losses for Q2 and Q1 2019 were $37.4 million and $10.1 million respectively. As you may recall, in Q1 2019 we booked $53.5 million of license revenue received from our sub-licensees. That revenue was partially offset by $16.4 million of net expense as a result from March 2019 jury verdict against Puma. On a non-GAAP basis which is adjusted to remove the impact of stock-based compensation, we reported a net loss of $4.7 million or $0.12 per share for the third quarter of 2019. Gross revenue from NERLYNX sales was $60.8 million in Q3 2019 versus $60.3 million in Q2 2019. As I mentioned, net revenue from NERLYNX sales was $53.5 million, a slight decline from net sales of $53.8 million for the second quarter of 2019. Our gross to net adjustment in Q3 was about 12%, a slight increase from the 11% net adjustment in Q2. The increase was driven by higher Medicare reimbursements and GPO expenses. We expect gross to net to increase to approximately 13% for Q4 2019. Cost of sales for the third quarter was $9.4 million, which included the amortization of milestone payments to the licensure of neratinib of approximately $1 million. Going forward, we will continue to recognize amortization of the…

Thanks Maximo. We are not pleased with our third quarter revenues and recognize that we need to improve NERLYNX sales growth. Puma senior management in cooperation with the Commercialization Committee of the board of directors continues to remain focused on NERLYNX revenues in sales and sales growth in 2019 and beyond. As was mentioned in the commercial presentation October's bottle sold showed an increase of the average monthly bottle sold in Q3, which we are hopeful is indicative of an improvement in NERLYNX sales and we will continue to monitor these trends and look forward to discussing them further with investors in future calls. This concludes today's presentation. We will now turn the floor back to the operator for Q&A. Operator?

[Operator Instructions] Our first question comes from the line of Alethia Young with Cantor Fitzgerald. Please proceed with your question.

I have a couple. The first one, could you potentially clarify the percentage of people that you kind of estimate might have gone to a titration regimen, so we can maybe perhaps put in context how to think about October? And then on the second question, looking at what the math says on your fourth quarter number, we need to be $53 million or about $58 million, if I think my math is right. So maybe talk about like under scenario, why you have confidence that you think you can maintain kind of flat revenues from where we are today and that one might be the titration, but I just wanted to talk about other puts and takes related to that as well? Thanks.

Okay. Alethia, thank you for the question. Your first question was on what percent of the patients are using the dose titration, correct?

Yes. With the ballpark, if possible.

Yes. Well if you look on Slide 6 of our commercial presentation, we said that 18% of the patients in Q3 we believe used the dose titration and 20% - in Q4 for October, the month of October, it was up to 25%.

Okay. And then can you just - so that - so when you - can you kind of walk us through the math to think about like how you could get kind of an acceleration as you were talking about it seems like the scenario is, is that people were - the titration disrupted the amount of bottles sold and then…

Right.

There's some possibility you get the math back on that in the fourth quarter and beyond. So maybe can you just flesh out a little bit more?

Yes, sure. Okay. So let's look at it this way, right. So just using the loperamide alone regimen from control, the discontinuation rate was 45%, right. And we know that the discontinuations with neratinib tend to all be pretty much in month 1 or in month 12. So it's kind of a barbell, right, if they make it past the first month, they go all the way to month 12. So using that assumption in a model, right, for every 100 patients, if you have 45% of them just get one bottle and stop and the other 55 get the full year, right. The average bottle sold to those 100 patients is somewhere on six or seven. If you use the budesonide arm, which is a lower discontinuation rate which is 20% and do the same math, right, assume 20% of them just get one bottle, the rest go the full year, that takes the average up to somewhere between 9 to 10 bottles per patient. And on the dose escalation, using the 13% discontinuation rate from the data presented at ASCO, again assume that you get 13 patients who just get one bottle and stop, and then assume for the others they're just getting 11 bottles, right, because they're one short because the dose escalation. That again takes you up to an average bottles of between 9 and 10. So, using that math, I can see where we can get to an increase in the average bottles per patient.

And then can you talk a little bit more about trend related to discontinuations perhaps in the fourth quarter? It seems like probably from kind of the middle of November to December might be a challenge, but just maybe can you talk about how you think those might play out for you as well just based on not discontinuations, but just people not going on therapy shall we say.

Yes. So we don't notice, I'm not aware of any patients like taking a drug holiday like stopping during the holidays, and then restarting in January. So for continuing patients, I don't see any disruption. In terms of new patient starts in for Thanksgiving and Christmas, different regions and different sales reps you know give us different indications. Some say they don't feel there’ll be a slowdown. Some say there might be. So I think we're kind of - we don't have any reason to absolutely believe that we're going to see that in this Thanksgiving and Christmas. We're just taking the conservative route, which is to assume that's correct. And we're just taking the conservative view on that

Our next question comes from the line of Yigal Nochomovitz with Citigroup. Please proceed with your question.

Alan, are you seeing any early trends in the fourth quarter with respect to the prophylactic budesonide and the uptake of that relative to loperamide?

That is a difficult question, Yigal because of that label update was just done recently, I have not been able to - it was just done like in October. I have not gotten a chance to look at that data. I know last time I looked at the voucher analysis if I remember, and I'm grabbing to see if I have it here. And I thought I brought it with me - I did, yes. If you look at the vouchers because we have the antidiarrheal vouchers in Q3, other than the use of loperamide, budesonide was the most frequently used drug through the vouchers.

And then with respect to - I had a question on this new trial for the updated design for the SUMMIT trial.

Yes.

So I think you were saying that - the FDA was saying you wouldn't expect to see a response on fulvestrant since they had previously been exposed to that mechanism. And then you wouldn't expect to see a response on trastuzumab either because they were - they want HER2 amplified. So I guess the question is why - why does the FDA even insist on fulvestrant monotherapy, why not just do fulvestrant plus tras compared to the triple? Is there a reason they want fulvestrant by itself?

That’s a good question. That was discussed. And in our meeting with them, I think it was - just to be able to separate the activity of all the components because clearly, if you look at the activity of the triple looks very good. And I think they just wanted to get a better feel for what role each of the components was playing. And so, by - I completely understand your concern, which is you wouldn't really expect sylvestris alone to have much activity, and so, that was one of the reasons we perceived that they recommended this type of assignment to stage, so you're just exposing a small number of patients to it. And if indeed there's no signal, it drops off quick. And you limit the exposure of the patients to what is perceived to be an inferior regimen.

And then with respect to the finance side of the company and the R&D budgeting, you said your R&D budget will decrease significantly with the roll-off of alone arm of CONTROL. So, I'm just wondering, if the revenue sort of stay where they are at the current rate, do you think you can get to a cash flow breakeven just by tightening up on the OpEx line or is that not for a consideration?

Well, look, obviously our goal is to grow NERLYNX revenue. You've certainly seen a pretty sharp drop in our R&D expenses from Q2 to Q3. And we're going to obviously continue to drop that again. I don't know the answer to that. We haven't really modeled the scenario of what happens if we just get to flat revenues. I don't think that's something we really want to - want as a goal. We're obviously looking to grow them. So, I don't know the answer to that question.

Okay. And then just one more, given the recent results with neratinib in the metastatic breast cancer setting, I was just curious to get your thoughts on how you see what the NALA trial has been providing a differentiated option for patients in metastatic breast cancer and where you would see neratinib in with the spec relative to the tucatinib in this whole line of patients?

Yes. I think we aren't going to know the answer to that until we see the data and get a better understanding for both the safety as well as the efficacy from that trial. So I don't know that we can answer that until we see the data

Our next question comes from the line of Michael Schmidt with Guggenheim. Please proceed with your question.

I had two. So, one question on regarding the cervical cancer cohort or study I guess what did the FDA communicated to you with respect to potential size, a number of patients required at a minimum for an IND filing or sNDA filing rather and then what sort of is the efficacy hurdle in that setting?

So, in terms of the cervical cancer cohorts, I don't remember any specific number being discussed with the FDA. I think that it was somewhat in our judgment. I am comfortable especially with the screening from using HER-Seq, which obviously is going to find a lot of these patients to put into SUMMIT. That will have a comfortable number to be able to put in the sNDA in the timeline we're looking for. In terms of the bar if you will, I don't know the answer to that. I seem to remember that KEYTRUDA got approved in a single arm study and I'm talking off the top my head here. But I’ve seemed to recall that response rate was somewhere around 15% to 20% or something like that. So, I think that was - that’s seem to be recollection of it.

And then, I guess the other question I had just on the bottled volume that the chart that you show that month. I'm just curious and I know you did mention the slight increase in gross to net this year towards the end of the year, it sounds like more so. But I guess did you notice any impact on demand I suppose potentially driven by some of the price increases that have been taken?

We have not noticed any change in demand due to the price increase.

Our next question comes from the line of Kennen MacKay from RBC Capital Markets. Please proceed with your question.

Alan, just one housekeeping question as we think about the control trial. You've mentioned in the second expansion portion of that trial if more than four patients respond of the 18 in that setting, this could be expanded further. What would the third expansion be and potentially how many patients from your conversation with the FDA might be required for a registrational package in HER2 mutated. And apologies, that was SUMMIT not - so I think I missed both.

Okay. Yes.

And next on commercial, I just wanted to make sure I heard you correctly that prescriptions grew sequentially quarter over quarter. Was there a qualifier that that was around an Rx and not TRx? I'm just thinking about the reduced dosing dynamic and potential the monthly bottle to last beyond a month. Can you help us understand trends in new-to-brand prescriptions which might be indicative of new starts and whether there's new growth there? Thanks so much.

So in terms of your first question on the SUMMIT study, so we'll be expanding it so that it's fulvestrant alone; trastuzumab, fulvestrant; neratinib plus fulvestrant plus trastuzumab. DNA 7 in the first, if they if one of seven doesn't respond, you shut it down. If it does, we expand it to 18 so it’s another 11 patients there. In terms of what it expands to and what's needed for the approval for the FNDA, it's really going to depend on what we see and how much the operation is. I mean without seeing the data on the trastuzumab, fulvestrant and fulvestrant alone, it’s obviously challenging to see that. I mean we can get a pretty good idea of what we think the triplet will show based on the data we have so far. It's just very challenging to say with the other two arms will show. So if they are indeed low in activity, I don't think we would need a lot of patients. If for some reason we see activity more than we expected, you may need more. So I don't know the answer to that but I think we are comfortable based on our assumptions that the timeline we looked at which is kind of the Q4 2020 through Q2 of 2021, that timeframe would be enough data for us to have the Pre-NDA meeting with FDA.

And just any commentary around the prescription or any clarification around prescription commentary or the brand?

Yes. So there was NRF increase of 4% from Q2 to Q3. I don't have the TRx in front of me, so I can't answer that question. Yes, I don't have that data in front of me, so I don't remember it. So, I can't - I don't know the answer to that one.

Our next question comes from the line of Paul Choi with Goldman Sachs. Please proceed with your question.

My first question is you presented the slide on control with regard to the results with the various anti-diarrheal strategies. And I guess Alan as your sales force has been in the field has there been any updated thoughts with - on views on non-loperamide utilization? And has any one of the other options there proven or proven to be or resonate more with clinicians in the field? Any color there you could provide would be great.

Yes. So, I would say that based on the slide you saw in our commercial deck with regard to the adoption of the dose escalation that - the feedback we've been getting is it resonates very positively. I’d rather than say very positively because a lot of physicians already do this for a lot of oral cancer drugs where they started half a dose and kind of worked their way up for tolerability. The second is it's very easy to implement, right? It doesn't require another prescription to be written. It's not an increase in the pill burden on the patients that they're taking lots of pills during multiple times a day. That has definitely resonated well. So, I would say I would not be surprised to see the people who were just using Imodium alone, right? To prophylax the patient switching to using the dose escalation. And remember when you do the dose escalation there's no prophylaxis use, there’s no anti-diarrheal prophylaxis used. You just use Imodium if you need it.

And any utilization of any of the other agents either in combination with dose escalation or in combination at higher doses of NERLYNX?

Yes. I don't know if once - with NERLYNX, the side effect profile is that you get a very high incidence of grade 3 diarrhea the first month. It's lower in the second month, and then by kind of month three, four, etcetera, it diminishes greatly. So it's really that first month or two you actually get past. I'm not aware of people using the dose escalation when they do get grade 3 diarrhea. Are they just using Imodium or a combination? The feedback we've tended to be getting from the field is that when they're using the dose escalation, they're just not seeing grade 3 diarrhea, they might be seeing grade 1 or grade 2, but they’re not seeing the grade 3.

And then just on the international side, you've had some approvals and other additional countries come online recently. I was just wondering, could you maybe lay out for us in the next year or so the - any other geographies that we should be mindful of where you could see incremental contributions from your partners in 2020? Thank you.

Yes. So in terms of the - from a launch perspective, Pierre Fabre, our partner in Europe is going to first launch in the U.K., Germany and Austria, and then we'll roll out the other 25 to 30 countries during 2020. So, that obviously will have a revenue ad for us. In terms of new approvals, China is probably the next big one for us. And I believe on the slide we gave, a timing for that. If I remember correctly, that was for some time in the first half of 2020, want to check that slide real quick. Yes, China in the first half of 2020, so that would probably be the next big one.

Our next question comes from the line of Thomas Smith from SVB Leerink. Please proceed with your question.

First just in terms of the prescriber base, Alan can you give us a sense for how many unique physicians prescribe NERLYNX in the quarter? And then I guess how this is change versus last quarter? Do you still feel like you're still growing the prescriber base here?

Yes. So I don't have the number of new prescribers in the quarter in front of me but yes, we do monitor kind of new physicians, if you will, and every week, we continue to see new physicians prescribing the drug. So I don't think we've maxed out in terms of our total number of new physicians. I don't - like I said, I don't have the numbers in front of me so I can't really give any transparency into kind of how quick it's growing or anything like that but we - from a numerical standpoint, yes, it is increasing.

Okay. And then can you comment on sales force stability? I know this was an issue back in Q1, but I just wanted to get your sense for any changes in the makeup of the sales force and whether this could have had any impact on sales in the quarter?

Yes. So we have 80 sales reps and usually the averages you'll have 10% to 15% of your territories open at any time point. Currently, we've got seven open positions. So we're kind of below that 10% threshold. So that continues to remain on the low side for us. And we're very pleased with that.

Right. Okay. And then, one last question around off-label use. I was wondering if you could just give us a sense for how much of NERLYNX sales are coming from either the metastatic setting or use in patients with brain mets? Just any kind of quantification around that would be really helpful.

So we see less than 5% of our sales coming from the metastatic indication and that tends to be spread across metastatic use, not necessarily in the NALA regimen in combination with capecitabine, but they can give it like as a single agent and things like that. We couldn't get - can’t get use in brain mets, and then we also get off-label use in the HER2 mutations. So because we don't market that, we only market the extended adjuvant, we don't get a lot of transparency and exactly what percent of that - less than 5% is coming from each one. But I can say anecdotally speaking to physicians, we do hear a lot of people using it for the HER2 mutations.

Our next question comes from the line of Cory Kasimov from JPMorgan. Please proceed with your question.

This is Neena on for Cory. So just a follow-up on the prior question about the prescriber base, can you share what percentage of target prescribers you've been able to reach? This quarter, I think it was 75% last quarter and kind of to follow on that, can you also share what percentage you're seeing actually convert over to prescribers?

Yes. So in terms of our prescriber reach, I don't think it increased much from last quarter. And again, reach is defined as just we met with them once. That’s not obviously means they're prescribers. I don't have the numbers in front of me of what percent of the prescribers we've reached. Have actually you know converted to prescribers. But as I said it's continuing to increase.

And then what are you kind of seeing from you know talking about the sales force kind of turnover? Are you seeing kind of the new sales reps that you place earlier this year starting to get a little bit more productive? What are you just generally seeing there?

Yes. That's a good question. I think that what we tend to see with the sales force is that you know obviously when they first come on line, you know just having someone there can help the productivity. But you know over time the more meetings they're doing with doctors and obviously you know the more, the more active they're getting. You know we do tend to see them getting more productive. So yes, I do think with the newer reps from earlier this year we are seeing good growth in them going forward.

This concludes our Q&A session. I'd like to turn the call back to Mariann for closing remarks.

Thank you, Doug. Thank you for your time and attention today. As a reminder, this call may be accessed by a replay of the webcast of at pumabiotechnology.com beginning later today. Have a good evening.

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