Good afternoon. My name is Jesse, 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 question-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, Jesse. Good afternoon, and welcome to Puma's conference call to discuss our financial results for the second quarter of 2020. Joining me on the call today are Alan Auerbach, Chief Executive Officer, President and Chairman of the Board of Puma; Maximo Nougues, Chief Financial Officer; and Jeff Ludwig, Chief Commercial Officer. After market close today, Puma issued a news release detailing second quarter 2020 financial results. That news release, the slides that Jeff will refer to, and a webcast of this call are accessible via the homepage and Investor 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 results may differ than those expressed in these forward-looking statements due to a number of factors, which include the risk factors disclosed in the periodic and current reports filed by Puma Securities and Exchange Commission from time to time. 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 6, 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 also refer to certain non-GAAP financial measures that involve adjustments to our GAAP figures. We believe these non-GAAP metrics may be useful to investors as a supplement to but not a substitute for our GAAP financial measures. Please refer to our second quarter 2020 news released for reconciliation of our GAAP to 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 second quarter of 2020 of $70.6 million. Total Revenue includes net U.S. NERLYNX sales, as well as license and royalty fees from our sub-licensees. Net NERLYNX sales were $48.8 million in the second quarter of 2020, representing a slight increase from the $48.6 million in net sales reported in the first quarter of 2020, and a decrease from the $53.8 million reported in Q2 of 2019. As we reported on our fourth quarter earnings call, during the fourth quarter of 2019, there was an increase in inventory purchased by the specialty pharmacies, which we estimate was approximately one week of excess inventory. And we also reported on our fourth quarter earnings call there was an approximately four weeks of inventory in our distribution network. Our first quarter call, we reported that the specialty pharmacies had drawn down some of their excess inventory to meet demand. However, our distribution network still maintained approximately four weeks of inventory at the end of the first quarter. During the second quarter, we saw specialty pharmacies continue to draw down from their existing inventory to meet demand, which we believe may have negatively impacted second quarter revenue by approximately $4 million to $5 million. Our distribution network had approximately three weeks of inventory at the end of the second quarter of 2020, which is more in line with the level seen in 2019 prior to the inventory buy in during the fourth quarter of 2019. Also during the second quarter, license fees increased $20.7 million, which included a one-time payment due to the regulatory approval of NERLYNX in mainland China, and royalty revenue during the quarter was $1.1 million. I will begin with a review of…

Thanks, Alan. Really appreciate it. It is great to be here, and I'm honored to be leading Puma's commercial organization. We are proud of what we have accomplished so far, but clearly know there is much more to do to support patients and their families battling breast cancer. Before I move into the commercial review, just a reminder that I will be making forward-looking statements. During the second quarter of 2020, Puma's commercial access was negatively impacted by the COVID-19 pandemic. As we reported on our first quarter earnings call, we did not see an impact from COVID-19 on new patient starts in Q1. However, we did see an impact in mid-Q2. As we previously reported, the number of new patients signing up in April through our specialty pharmacy channel was essentially flat compared to those signing up in March. We did, however, see a decline in May, more specifically, in the latter part of the month, which we believe was due to the COVID-19 pandemic and the stay-at-home orders and quarantines that were in place in various parts of the U.S. This trend did start to recover in June, which we believe may have been related to states beginning to open back up. We are aware of other companies who have drugs to treat early stage HER2-positive breast cancer reporting similar dynamics in May and June. So we believe that this COVID-19 impact may have had a broader impact on the early stage breast cancer market. As you may recall, we have two channels that provide NERLYNX to patients. We refer to these as our specialty pharmacy channel and our specialty distributor channel, or in-office dispensing channel. In the second quarter, bottles sold in the specialty distribution channel represented approximately 22% of the total bottles sold in the quarter.…

Thanks, Jeff. I will begin with a brief summary of our financial results for the second quarter of 2020. Please note that I will make comparisons to Q1 2020 and Q4 2019, which we believe are better indications of our progress as a commercial company and year-over-year comparisons. For more information, I recommend that you refer to our 10-Q, which will be filed today, and includes our consolidated financial statement. For the second quarter of 2020, we reported net income based on GAAP of $3.4 million or $0.08 per diluted share. Our GAAP net losses for Q1 2020 and Q4 2019 were $16.9 million and $11.2 million, respectively. On a non-GAAP basis, which is adjusted to remove the impact of stock-based compensation, we reported net income of $14 million or $0.35 per diluted share for the second quarter of 2020. Gross revenue from NERLYNX sales was $57 million in Q2 2020 versus $58 million in Q1. As Alan mentioned, net revenue from NERLYNX sales was $48.8 million, a slight increase from net sales of $48.6 million in the first quarter of 2019. In Q2 2020, we recognized $20.7 million in license revenue, and $1.1 million in royalty revenue from our global partners. Our gross to net adjustment in Q2 was 14.4%, a decrease from the 16.3% gross to net adjustment in Q1. The decrease was driven mostly by lower copay and coverage gap expenses, driven by seasonality. Cost of sales for the second quarter was $9.4 million, which included the amortization of milestone payments to the licensor of neratinib of approximately $1.3 million. Going forward, we will continue to recognize amortization of the milestone payment to the licensor for about $2 million per quarter cost of sales. For full year 2020, Puma anticipates that NERLYNX net sales will be in…

Thanks, Maximo. We continue to recognize that we need to improve NERLYNX sales growth. Puma's senior management, in cooperation with the Commercial Committee of the Board of Directors, continue to remain focused on n NERLYNX revenue and sales growth in 2020 and beyond. We have made a number of new hires in our commercial team, and we are also adapting to the virtual commercial environment that we need to pivot toward, due to the COVID-19 pandemic. We are hopeful that these new team members and changes to our commercial infrastructure will make a positive contribution to NERLYNX sales growth, and we look forward to updating investors on this in the future. There continues to remain a significant unmet need for women battling breast cancer. We at Puma are committed and passionate about finding more effective ways and helping these patients during their journey, and we will continue to strive to achieve that goal. This concludes today's presentation. We will now turn the floor back to the operator for QA. Operator?

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Thank you. Our first question comes from the line of Yigal Nochomovitz with Citi. Please proceed with your question.

Hi, this is Samantha on for Yigal. Thanks very much for taking our questions. First, I want to start with just -- how do you see the contribution of metastatic revenues to overall NERLYNX picture evolving as you work to develop this indication? And so far, have you seen any off-label use of other HER2-driven cancers, given the solid benefit you've seen on [indiscernible]?

Hi, Samantha. Thank you for the question. So I believe Jeff said in his presentation that somewhere between 8% to 10% of our usage is in the metastatic setting. So I think that's remained what we've continued to see. Now, when they come in as a script for metastatic, we don't know whether or not it's a HER2-positive metastatic or HER2-mutated, or they have brain mets, or they don't have brain mets. I can definitely say anecdotally, we certainly hear from physicians that they're using NERLYNX commercially in her two mutated breast cancer, and they're using it in HER2-positive metastatic breast cancer that has brain mets. I don't, unfortunately, have any breakdown of exactly the numbers that are behind that.

Got it. That's helpful. And then just on the guidance, on yesterday's guidance, I wanted to confirm that that is for both the adjuvant setting and the metastatic. Is that correct?

Yes, that is correct.

Okay, great. Thanks so much for taking our questions.

Thank you. Our next question comes from line of Kennen Mackey with RBC. Please proceed with your question.

Hi, this is Kim [ph] on for Kennen. Thanks for taking our questions. So first question is about an interesting research paper recently, identifying neratinib as a potent COVID-19; the viral main protease inhibitor, using computational approaches. The research kind of followed an earlier nature, publication looking four different moiety classes that can dive into the main proteins, the functional side, in which neratinib's chemical structure just looked like -- kind of resembled the M3 class. So does this kind of research come into your awareness too? And that will trigger your interest to do sound biochemical acids, and maybe animal studies, and clinical trials? Thank you.

Yes, hi. Thank you for the question. Yes, we are aware of that publication from that Russian group. And we have had investigators who have been doing work on the neratinib in COVID-19. I don't want to say too much about that research, but suffice it to say, we have had many external researchers who have done some work with neratinib in COVID-19, coming up with similar types of conclusions. Once we get some more data on this under our belts, I think we will plan to, in some way, communicate that to investors, either by publishing it, or in some way getting it to be public information. But yes, it is something we have interest in, and it is something we have active research looking into.

Thank you. Then we have one follow-up on the HER2-mutant cervical cancer cohort update. So, compared to the SGO data, there were five more patients' data included for the safety analysis, and one more patient data included with the advocacy analysis. Can we know approximately how many patients have been enrolled into the cervical cancer cohort so far? And may you provide guidance on the timing and the size for the next data update, and more -- how many cervical cancer patients' data are required by FDA for regulatory discussion? And that's all our questions. Thank you.

Thank you for the question on the HER2-mutated cervical cancer. I apologize. I do not have the update on that in front of me. I know we do plan on presenting more data on that. I don't know the exact timing of that. So I'll need to get back to you on that. So I apologize for not having that in front of me. To your question, which is, how many patients do we need to go to the FDA and discuss it with them? This would be an SNDA. And again, HER2-mutated cervical cancer, as I recall, is about 5% of the cervical cancer population. So it's not like 10,000 patients or something. It's obviously much smaller. And I'm aware of -- for instance, I know Keytruda got approved in the PD-L1 high, and I don't think there end was a huge number. So I'm not imagining we're going to need hundreds of patients here. Let me get back to you with a little more of an update on where that is and what our timing would be for expanding the label.

Thank you. That's really helpful.

Thank you. Our next question comes from Cory Kasimov with JPMorgan. Please proceed with your question.

Hey, guys. Thanks for taking my question. This is Matthew on for Cory. I'm just wondering your thoughts on NERLYNX pricing. Are you comfortable where NERLYNX is currently priced, or should we expect the pace of increases to be similar to the foreign increases at 10% each that has occurred over the last 18 months?

Jeff, if you'd like to handle that?

Sure. Hi, Matthew. Good question. I appreciate it. I mean, first of all, I would say we're not going to proactively comment on any future potential pricing strategies. We wouldn't do that. But what I will tell you is the way you want to think about it is we are very, very committed to ensuring a very strong value proposition in this marketplace. We also want to ensure that there is very strong physician and patient access. And obviously, as part of our discussions, we continue to look at the competitive marketplace. So we've made some decisions in the past, but we wouldn't comment at this point on any future potential pricing decisions.

Great. Thanks for taking my question.

Thank you. Our next question comes from the line of Geoff Meacham with Bank of America. Please proceed with your question.

Hey guys, this is Scott on for Geoff. Thanks for taking our question. I believe there was new language added to the package insert of NERLYNX recently, as it relates to the ExteNET trial, specifically in regards to no statistical difference in the OS after eight years of follow-up. So just wondering how you guys think this will impact sales moving forward? And then for the patients that are starting on the lower dose, do you know what dose these patients are typically starting on and the duration the average patient is on this lower dose until they reach the 240 milligrams? And given the small difference in benefit, whether it's the DFS or the OS, how confident are you that these lower doses aren't impacting the results and potentially making them more equivalent to placebo patients? Thanks.

So to answer your first question, Scott, as you know, the ExteNET trial in rolled a wide range of patients, and in the ITT population, it was the hormone receptor positive and hormone receptor negative patients. As you know, the actual use of the drug clinically does not tend to be in the ITT population. It's not in all comers. And the typical what you hear from physicians is they use it in the HR-positive patients, and or the HR-positive patients who are at a higher risk. We plan on presenting the data from those cohorts, specifically the HR-positive group and the HR-positive high-risk group at the San Antonio Breast Cancer meeting this year. Obviously, we can't comment on that. But clearly, if we were to see a positive impact in those subgroups, where the drug is used commercially, we think that, yes, it could have a positive impact on our sales. Obviously, we have to wait for that data to be presented, and we can't comment on it until it is. But I think you can understand that logic. Can you repeat your second question, please?

Yes, sure. Just wondering about the patients on the lower dose. Do you know what dose these patients are typically starting on and the duration, that they're on that lower dose until they reach the 240? And given the kind of tighter range in the benefit, if this lower dose is potentially having any impact on the overall survival or the GFS, as you kind of look at it?

Okay. So I think Jeff will take first part, and I'll take second part of that question

And Scott, I think it's a good question. Obviously, as we highlighted in our opening statements about the control data, we feel very good about the control data in that it does significantly change the tolerability of NERLYNX. And if you follow that paper and the data that was presented, what we're suggesting in that paper, at least on the dose escalation arm, is to start patients on three pills for the first week, four pills for the second week, and then you're up to the full dose at the third week. So again, that's the data that we have out there. That's the protocol that many customers are beginning to adopt. So you do have some variability, but that is really the flow. And ultimately, the idea is to get patients up to the full dose. In the ExteNET study, the average dose was somewhere around 211 or so microgram milligrams. And ultimately, that's where we expect patients to get in the relatively near future. Given that, when the dose escalated happens relatively quickly, we do not expect to see a negative impact on efficacy. Now, you asked a broader question about…

Just to follow up, in terms of the dosage, the three pills a day would be 120, the four pills would be 160, and the six pills would be 240 milligrams a day. In terms of your question, do we expect it to impact efficacy? I can answer that in two ways. First of all, as Jeff just outlined, look, it's a 12-month course of therapy. And if they do the dose escalation the way it's in the control trial, you're talking about two weeks where they're getting a lower dose. I wouldn't imagine that two weeks of a lower dose compared to 50 weeks at full dose is going to have a negative impact on the efficacy. I will also note that we had looked at this when we were first preparing for the ODAC back in 2017, I guess that was, and we had looked at -- I don't remember the number off top my head, but it was somewhere in the range of 30% plus of the patients in ExteNETs had actually gone to a lower dose and stayed in that lower dose going forward. And if I remember correctly, the efficacy was not very much compromised to the patients that were on those lower doses. And again, a lot of those were -- they started at 240 milligrams, then went down to 200 milligrams, 160 milligrams, or 120 milligrams, or whatever, based on tolerability. And I don't remember that there was much, if any, compromise in the efficacy in that patient subgroup.

Got it very helpful. Thanks, guys.

Thank you. Our next question comes from Paul Choi with Goldman Sachs. Please proceed with your question.

Thank you, and good afternoon, everyone. My first question is for Jeff. I'm just -- if you'll maybe just comment on how you're seeing the salesforce, particularly with regard to virtual interaction capabilities. Is the Salesforce right sized? And just what sort of feedback, given the given the commercial dynamics in the market right now, you're seeing with regards to other competing metastatic agents out there? And then my second question is just as you go into your pre-NDA meeting for HER2-mutated breast cancer in the front half next year, can you maybe just remind us any additional studies or analyses that you'll have to conduct ahead of your pre-NDA meeting? Thank you very much.

Okay, Jeff, you want to take the first one on the salesforce?

Yes, happy to. Thanks for the question, Paul. Obviously, a unique environment right now with the COVID pandemics that, well, I guess fortunately, none of us have been through before. Clearly, as you've seen, as we highlighted, and I know many others have highlighted, the amount of direct access to customers have changed significantly. And ultimately, we're trying to pivot and adjust the field force to adapt to that new environment, which, I wish I had a crystal ball, but is likely to go on at least for several additional months here. So what we've really tried to do, Paul, in this situation is to pivot quickly to remote or virtual interactions with customers. There are still some live interactions going on, and we think about this as a very local or regional decision. And where localities or regions open up, we will pivot back to as much as we can live interactions. Given that that has not happened a lot, we've significantly increased non-face-to-face interactions, increased peer-to-peer programs, and ultimately, tried to maintain a strong share voice through phone, video, Zoom, etcetera. And so, we're all adapting to that, and we feel pretty good about our ability to compete in that environment, but we will continue to evolve as best we can. We are also being very diligent and smart with our head counts, and we're making sure that our teams are right sized, and as a role or position opens up, we evaluate that very closely and decide whether or not we're going to fill currently or whether we want to fill in the future. So we're being very smart with the utilization of resources given this time as well.

And then Paul, on the second question regarding the HER2-mutant population, so if I remember correctly, it was September, October of last year, we had a meeting with the FDA to discuss what would be necessary for us to be able to file an NDA in the HER2-mutated breast indication. And we had shown them the data at that time on the neratinib plus Herceptin plus fulvestrant arm of the trial. And what they asked us to do was to help to better understand what neratinib's contribution was to that triplet, and therefore to do the modification we've done, which is the Simon two-stage, where one arm is the triplet, neratinib, Herceptin, and fulvestrant, the other arm is Herceptin, fulvestrant, and the other one is fulvestrant alone. And the way the Simon two-stage works is you -- an end of seven in each one. And if you don't see a responder in the first seven patients, you shut down the arm. If you do see a responder, you expand it to 18 patients. So, I think we need to wait for that data to know what further analyses we need to do. I would imagine that if we continue to see the same response rate in the triplet arm and we don't see any responses in the other two arms, then that's a pretty easy one to answer. If you end up seeing for some reason, responses and the others, then that's going to be a different situation. But I think we have to wait for that data before we can know exactly what we're going to need to follow the NDA.

Great. Thank you for clarifying that.

Thank you. This concludes our question-and-answer session. I would like to turn this conference back over to Mariann for closing comments.

Thank you for your interest in Puma Biotechnology. As a reminder, this call may be accessed by a 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.