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

Thank you, Brock. Good afternoon and welcome to Puma's conference call to discuss our financial results for the fourth quarter and full year 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 close today, Puma issued a news release detailing fourth quarter 2019 financial results. That news release, the slides that Alan will refer to and a webcast of this call are accessible via the homepage and investor sections of our website at pumabiotechnology.com. The webcast and presentation slides will be archived on our website and available for replay for the next 90 days. Today's conference call will include statements about the company's future expectations, plans and prospects that constitute forward-looking statements for purposes of federal securities laws. Such statements are subject to risks and uncertainties and actual events and results may differ from those expressed in these forward-looking statements. For a full discussion of these risks and uncertainties, please review our periodic and current reports filed with the Securities and Exchange Commission from time to time including once filed our annual report on Form 10-K for the year ended December 31, 2019, which will be filed next week. 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 20, 2020. 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 fourth 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 revenue for the fourth quarter of 2019 of $62.9 million. Total product revenue consisted of license revenue of $4 million, royalty revenue of $0.2 million and net sales of NERLYNX of $58.7 million. Net sales of $58.7 million in the fourth quarter of 2019 represented a 9.7% increase from the $53.5 million in net sales reported in the third quarter of 2019. I will begin with a review of some of the highlights of the quarter and then provide more details on NERLYNX' commercial activities in the U.S. Maximo Nougues will follow with highlights of the key components of our financial statements for the fourth quarter of 2019. In September, we announced that our licensing partner in Latin America, Pint Pharma received their first regulatory approval in Argentina for NERLYNX for the extended adjuvant treatment of adult patients with early-stage hormone receptor positive, HER2 over-expressed amplified breast cancer and who completed adjuvant trastuzumab-based therapy less than one year ago. In November, we announced that our licensing partner in Greater China, CANbridge Pharmaceuticals received market approval in Hong Kong. According to the terms of the licensing agreements with both of those entities, Puma will be receiving royalties from the sales of NERLYNX in those territories once they are commercialized. In collaboration with our licensed partners, we also anticipate announcing additional regulatory decisions on neratinib in additional countries outside of the United States and Europe throughout 2020. As investors are aware in the second quarter of 2019, we presented results from our Phase III trial of neratinib in third-line HER2-positive metastatic breast cancer also known as the NALA trial at the American Society of Clinical Oncology Annual Meeting in June. A copy of the ASCO presentation…

Thanks, Alan. Let me start with a quick summary of our financial results for the fourth quarter of 2019. Please note I will make comparisons to Q3 and Q2 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-K, which will be filed next week and will include our consolidated financial statements. In the fourth quarter of 2019, we reported a net loss based on GAAP of $11.2 million or $0.29 per share. Our GAAP net losses for Q3 and Q2 2019 were $16.9 million and $37.4 million respectively. On a non-GAAP basis, which is adjusted to remove the impact of stock-based compensation, we reported a net income of $0.3 million or $0.01 per share for the fourth quarter of 2019. Gross revenue from NERLYNX sales was $68.5 million in Q4 2019 versus $60.8 million in Q3 2019. As Alan mentioned, net revenue from NERLYNX sales was $58.7 million, an increase from net sales of $53.5 million for the third quarter of 2019. Also in Q4 2019, we received a $4 million license fee payment from Pierre Fabre related to an amendment to our license agreement that expanded their territory sales. Our gross to net adjustment in Q4 was about 14%, an increase from the 12% gross to net adjustment in Q3. The increase was driven mostly by higher Medicaid reimbursement. Net product sales for the full year 2019 were $211.6 million versus $200.5 million in 2018. And our gross to net for 2019 full year was about 13.7% compared to about 7% in 2018. Full year 2019 total revenue was $272.3 million compared to $251 million in 2018. Cost of sales for the fourth quarter was $10.1 million, which included the…

Thanks, Maximo. We continue to recognize that we need to improve NERLYNX sales growth. From the senior management in cooperation with Commercial Committee of the Board of Directors continues to remain focused on NERLYNX revenues and sales growth in 2020 and beyond. We have made a number of new hires in our commercial team and specifically within sales management and we are hopeful that these new team members will make a positive contribution to NERLYNX sales growth and we look forward to updating investors on this in the future. This concludes today's presentation. We will now turn the floor back to the operator for Q&A. Brock, can you please open up the Q&A please?

We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Ed White of H.C. Wainwright & Company. Please go ahead.

Hi. Thanks for taking my question. So Alan just wanted to ask a question on the 474 and 349 patents. If they are allowed and issued, can you make any comments on what the next steps would be regarding TAGRISSO?

Hi, Ed, thank you for the question. As I'm sure you can imagine the topic you're discussing is a very sensitive legal matter. And so therefore, we cannot comment much on it.

Okay. Understood. And then you just mentioned about new hires in the commercial. Can you just comment about the level of your sales force right now? Are you right-sized? Are you looking to make additional hires to fill any gaps that you have right now due to turnover?

Yeah. So I would say, we have a team of 80 sales reps. We are performing an exercise to look at whether or not that needs to be expanded or not. We're still in the process of doing that. So I'm hopeful we'll have that done in the next couple of months. During 2019, we added in a lot of senior management in our sales organization. We have a new VP of Sales, new area sales directors, a lot of new regional managers. They've now been with us anywhere from three to six months or so. So I would imagine, we will start to see the benefit of that team working together during 2020, probably more towards the back half of 2020. But I feel good about where that team is.

Okay. Thanks, Alan. And just staying on the sales. In the past you had commented that your prescriber reach is around – for the current label it's currently around 75%. Are you still around that level or making any more inroads? Thanks.

Yeah. In terms of the reach, there's a lot of accounts, especially some of the more higher volume ones that what we refer to as no-see accounts meaning that they won't allow a sales rep to go in there and they end up doing their own education work, either by the published research going to conferences, going to events and things like that, that probably makes up I would guess, 15% to 20% of the prescriber base. So when you get up to that 75-ish range, which is probably around where we are that's probably where you would top out. Now there's obviously a reach, but another topic is frequency, right, because the reach side that we used to show just basically showed, if that physician had been contacted by Puma. Well, in two and half years you can imagine if – since we've launched this drug, if you've reached someone once okay that's good, but obviously you'd like to have a more frequent interaction with them, so you can answer their questions increase their awareness of data and things like that. That is something that, we're certainly working to improve on, which is improving the frequency of our contact with physicians.

The next question comes from Alethia Young of Cantor Fitzgerald. Please go ahead.

Hey, guys. Thanks for taking my question. Maybe two for me. One, I'm not sure if my memory serves me correctly, but I think it does. I just wondered or maybe I missed it on the 2020 guidance. I guess I'm just trying to get a feel as to whether -- I know you talked about first quarter and some of the trends, but I didn't know if you could offer up any kind of opinion on how you think the rest of the year would shape out? And then, maybe my second question. I guess maybe digging a little bit more into this trend about kind of the population of kind of over the seasonality we saw like some shift. I mean I feel like we've seen seasonality before I guess. So I just wanted to see if there's anything particularly different that you're seeing about that particular type of seasonality that's like delayed in January or anything like that? Thanks.

Yeah. Hi Alethia. So, first of all in terms of Q1, the three impacts you're going to have is the inventory build in Q4 the seasonality which obviously leads to kind of the delay in filling the gap. So, I guess you're like -- if you were charting NRX, you would see them kind of flat, dropping and then coming back. So, it's kind of like a U, if you will, right? So when that's happening -- when the incline is -- when you're starting from the trough and kind of coming back up to where you were before, and that's happening in January. Obviously the month of January gets impacted, and so that's where the quarter gets impacted. So that would be the second one. The third obviously is the thing that we mentioned in terms of the lower doses. And then you obviously have in Q1 the higher gross to net, which as Maximo said, comes from a lot of the Medicare donut hole and things like that. So, all of that together is going to impact Q1. In terms of having seen this in the past, I don't remember last year well enough to speak to it as accurately as I would like to. But I seem to recall that the inventory build this year was higher than last year. So that may have the impact kind of the additional impact comparing 2020 Q1 to 2019 Q1.

And then on the guidance? Since 2020 like, is there a method or are you guys kind of leaving it open end until you figure out trends?

No, I would say this. So first of all in terms of the forecast for 2020, obviously in Q2 you're not -- you'll have the impact of the inventory. We're assuming the inventory drawdown will be completed by the end of March. So that's obviously going to have a positive impact on the numbers going forward. And then obviously on the gross to net line as well, that's going to be improved for the rest of the year as well. So, you won't -- go ahead sorry.

No. I just was curious if you're willing to quantify the inventory kind of stocking amount like how much of it was in revenue, like it was a couple of million or was it greater than that?

Yeah, I would say it was probably in the neighborhood of $5 million.

Okay, great.

So again, once that's worked down, it obviously will have a very positive impact on revenues.

Okay. Got it. Thanks.

The next question comes from Chris Shibutani of Cowen. Please go ahead.

Yes. Hi. Alan, you introduced a bit of a metric and observation about looking at the percentage of patients who are still taking the drug after six months and how you seem to have a larger group who started at the lower dose versus the standard. Can you maybe give us a sense for what we're talking about in terms of all patients who are new starts? What portion of those are, still taking at six months and maybe what those comparative numbers were?

Yeah. Chris thanks for the question. Let me take a step back. If you look at our slide in our presentation that looks at the percent of patients taking the lower dose of NERLYNX, so I'm looking at it right now, and I believe this is slide 5, okay? So, it takes us up to 90 days from the end of a given month for the specialty pharmacy to be able to tell us if a patient is still taking NERLYNX right? So there's kind of a lag from that in terms of discontinuations. So, unfortunately for the period kind of post ASCO when we really started to see a lot of the use of the drug -- of the dose escalation commercially, we don't have data yet to capture that. What we did do is we kind of looked back. So you'll notice on the slide, you always historically had some physicians who were doing this on their own, starting at a low dose and kind of titrating up. A lot of that comes from community physicians who treat a lot of different tumor types, so maybe they treat breast and lung and colon and other things, and they do this with other drugs. So, there's a lot of oral cancer drugs where a lot of physicians and a lot of those oral cancer drugs have tolerability issues. So a lot of physicians with other drugs will start at a lower dose and then kind of titrate up and they were doing the same thing with NERLYNX. So, what we did is we kind of analyzed those historical data, so kind of going back from Q1 of 2019 back. And so again, it's a small sample size. It's not huge, but at least is something that's indicative. The magnitude of the benefit we saw in terms of the absolute magnitude of increase of patients still taking the drug in the people who started at the lower dose compared to standard was around a double-digit number. I don't have it in front of me so I can't exactly quote it. But it was an encouraging trend such that we were positively inclined by it.

Then to switch over to the metastatic opportunity, two questions there. I think in the past you've talked about how even prior to approval there was something like 5% of patient use of neratinib was in the metastatic population. Can you update us on what that's been particularly since the NALA trial data read out mid last year that would be one? And then number two is there anything that you can let us know in terms of any regulatory interactions discussions that you've had that might suggest any reason to be concerned or put at risk the anticipated PDUFA in the second quarter I believe actually the end of April? Thanks.

Okay. So in terms of the off-label use it was somewhere in the range of 5% to 6% in Q4 of 2019. Anecdotally, we hear from physicians they use it in HER2-mutated breast cancer, they'll use it in patients with brain mets or they'll use it in HER2-metastatic breast cancer, but I don't know that necessarily that's using the NALA regimen right in combination with capecitabine sometimes it's just using it as a single agent, as a salvage therapy or something like that. So that's kind of our current off-label use. Our guidance does not include anything for the third-line metastatic because there's a lot of factors that we need to get clarification on in order to be able to issue that guidance. As you can imagine there's basically four outcomes that we can have in terms of the sNDA, right? The first one would be that the sNDA gets approved early; the second, would be it gets approved on time; the third would be there's some delay in the PDUFA date and it gets approved later; or the fourth would be they issue a CRL. Obviously, each one of those has a different impact on our revenues. And so we took a conservative view which was to kind of wait to see which one of those occurs and when it occurs before issuing our guidance. In terms of our interaction with the FDA I'm not aware of any interaction that would tell me that any one of those four options has a higher probability or a lower probability.

Okay. Thank you, Alan.

The next question comes from Yigal Nochomovitz of Citi. Please go ahead.

This is Samantha on for Yigal. Thanks very much for taking our questions. I'm curious what percentage of physicians do you believe are actually using dose titration? Is it a core group of physicians? Are you seeing adoption of this across a wide number of doctors?

Yes. I would say that in terms of the percent of physicians who are using it it's probably somewhere in the ballpark of the number of patients we're seeing so that 30-ish percent is probably a fair number.

Okay. And would you expect your the usage of this to continue to increase sort of linearly like we've seen over the last three quarters or should this eventually taper off?

Our hope would be that it increases because we know that this leads to improved tolerability, right? So I would much rather have the kind of loss of the refill in that first quarter they're on to gain the more refills when they stay on for a longer period of time. And I think in past calls we kind of went through that mathematical exercise where it's a pretty big increase in the number of refills we would see if they stayed on for a longer period of time. I would hope it continues to increase. We were at 28.7%, we're now at 30%. Does that mean it's starting to taper? It could. I think I just need more data to be able to answer that question accurately.

Got it. And then switching gears a bit to the European and the rest of the world territories that have launched so far. How should we think -- I know you gave us some guidance for revenues for those. But how should we think about the cadence of that and how that will go quarter-over-quarter? When NERLYNX is launched in a country specifically for Europe how long does it take before it gets in the physician's hands and they're able to prescribe the drug?

In most of the European countries you can't launch without reimbursement. So it would be you can't launch the drug unless you're reimbursed. So our assumption would be that when it's launched it starts getting used. I would expect that as you go out quarter-over-quarter specifically in Europe you're going to see the continued growth of the countries that it launched in but then obviously the uptake in the new countries as well.

Okay. Thanks very much for taking the question.

The next question is from Michael Schmidt of Guggenheim Securities. Please go ahead.

Hi. This is Kelsey on for Michael. Thanks for taking our question. I just had one quick one on the cervical cancer cohort. We're just wondering kind of given the lack of treatment options in relapsed cervical cancer and KEYTRUDA being a bit of kind of an odd benchmark. I guess what kind of is the bar there for NERLYNX? Thanks

Yeah. Thank you for the question. I would agree that, KEYTRUDA could make a good benchmark. I would say that, KEYTRUDA would be a good assumption to work with, that's certainly the one that we're kind of working with. I would say our current response rate is obviously, higher than KEYTRUDA. I think, kind of being in that range, kind of bracketed by KEYTRUDA and where we are. I would say, from our view, that's kind of a good range to be in.

Okay, great, thank you.

The next question is from Kennen MacKay of RBC Capital Markets. Please go ahead.

Hi. Thanks for taking my question. Alan, are there any plans to market, NERLYNX tablets and doses other than 40 milligrams? Or to sell bottles with fewer pills, at perhaps a slight premium per pill versus the month supply of 240 milligrams at six pills per day? It seems like they're obviously financial revenue recognition incentives here for the company, but also incentives for physicians and patients, given potential risk of new drug supply at the end of the month? Thanks.

Hi, Kennen, thank you for the question. That is indeed something, we're looking into. We hope to be able to update you on, future calls with regard to that.

Thanks.

The next question is from Paul Choi of Goldman Sachs. Please go ahead.

Thank you for taking my questions and good afternoon everybody. I just had a question with regard to the demand side. Alan, can you maybe just clarify a little bit more on your -- on the physician reach and your earlier comments with regard to new prescribers. I guess how much of the growth is, in terms of on the demand side is being driven by these new prescribers that you talked about earlier? And then, I had a follow-up question.

That is a good question. I don't have the answer, as to what percent of the RX in the quarter are driven by new versus existing. I apologize I don't have the numbers for that. I would say there is no question, a very large opportunity with new prescribers. We have certainly not topped out in terms of the -- where is our reach might be 75% of the physicians have been reached by the sales force. If I had to ballpark estimate, I would say, probably less than half of those have actually prescribed the drug. Again that's just a ballpark off the top of my head. There is no question a lot of additional opportunity for us, with physicians who have not written a prescription for NERLYNX yet. And especially increasing education and increasing awareness.

Okay got it. Thank you. And then, in prior calls you've talked a little bit about duration in some instances of patients going beyond 12 months of therapy. Is that still the case? And with regard to the dose titration in patients, who are doing that, is that increasing having any effect on duration of treatment here?

So in terms of patients going out beyond one year, I believe that is still occurring. I don't believe it's in a very large percent it might be 10% or less. In terms of the dose titration, as we mentioned our preliminary analysis is showing, that patients are staying on for longer. But again, as I mentioned to the earlier question, it's kind of based on that historical group that was doing it. And so it's based on some low numbers. I'm hopeful in the next couple of quarters we'll be able to update that number. And get a much better feel for what its doing.

Okay, great. Thanks. And then, I know, you obviously have some puts and takes with regard to the 2020 outlook including, the Metastatic indication and then the development of the patents. But I guess, are you in a comfortable enough position to sort of think about what might be the bookends for, how to think about cash utilization or cash burn, during this year or any sort of range, that you might be able to put out to the Street here. How to think about the puts and takes there?

Maximo, would you like to answer that?

Yeah, sure, our goal for 2020 is to be cash flow neutral. Obviously, there are some assumptions based on that, but what the guidance, we've put in that's our goal for now.

So at the current guidance Paul, that would be cash flow neutral.

Okay, great, thank you very much. I'll jump back into queue.

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

Thank you for your interest in Puma Biotechnology. As a reminder, this call may be accessed via replay of the webcast, at pumabiotechnology.com, beginning later today. Have a good evening.

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