Greetings ladies and gentlemen. Thank you for joining the Puma Biotechnology’s Third Quarter Earnings Call. At this time, all participants are in listen-only mode. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to your host Mariann Ohanesian, Senior Director. Thank you. You may begin.

Thank you, Diego. Good afternoon. And welcome to Puma’s conference call to discuss our financial results for the third quarter of 2020. Joining me on the call today are Alan Auerbach, Chief Executive Officer, President, and Chairman of the Board of Puma Biotechnology; Maximo Nougues, Chief Financial Officer; and Jeff Ludwig, Chief Commercial Officer. After market closed today, Puma issued a news release detailing third quarter 2020 financial results. That news release, the slides that Alan and Jeff will refer to, and a webcast of this call are accessible via the Homepage in 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 results may differ from 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 with the SEC 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, November 5, 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 if 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 third quarter 2020 news release for a 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 third quarter of 2020 of $80.8 million. Total revenue includes net U.S. NERLYNX sales as well as license and royalty fees from our sublicensees. Net NERLYNX sales were $49.3 million in the second quarter of 2020, representing a slight increase from the $48.8 million in net sales reported in the second quarter of 2020 and a decrease from the $53.5 million reported in Q3 of 2019. During the third quarter of 2020, we continue to experience challenges brought on as a result of the COVID-19 pandemic. Our third quarter results also included royalty revenue of $1.5 million. I will begin with a review of some of the highlights of the quarter, and then Jeff Ludwig will provide more details on the NERLYNX’s commercial activities. Maximo Nougues will follow with highlights of the key components of our financial statements for the third quarter of 2020. As investors are aware, Puma has an ongoing trial of neratinib in the extended adjuvant HER2-positive early breast cancer setting, referred to as the CONTROL trial, where we are investigating the use of several prophylactic techniques, including the use of anti-diarrheal drugs or dose escalation to reduce the incidence of the neratinib-related diarrhea and improve the tolerability of the drug. Interim results from the CONTROL trial were published in the September issue of the medical journal, Annals of Oncology. These results demonstrated that the incidence of Grade 3 diarrhea with neratinib can be reduced and the tolerability of the drug can be improved significantly using a wide variety of anti-diarrheal strategies. We believe this publication will help to increase the awareness of using these techniques to improve the tolerability of the drug. We further anticipate that additional…

Thanks, Alan. I appreciate it. And thanks to everyone for joining this call. This is the second earnings call that I have had the privilege of representing Puma’s commercial organization. And I can tell you that the team is working very hard to reposition the brand, tighten up our focus and execution and deploy resources in a very smart and efficient manner. I am proud of the progress that the team is making, but all of us realize that more must be done to help 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. As you may recall, we have two channels that provide their links to patients. We refer to these as our specialty pharmacy channel and our specialty distributor channel or in-office dispensing channel. The majority of our business flows through the specialty pharmacy channel. More specifically in Q3, approximately 77% of our business went through this channel with the remaining 23% flowing through the specialty distributor channel. This is in line with what we reported during our Q2 earnings call as well. Now, later in this call, Maximo will review the full financial results, but I will now provide you with the current U.S. sales results. We continue to operate in a very unique environment with the COVID-19 pandemic still impacting the majority of the country with no clear end in sight. As of yet, the commercial team has worked very hard to adapt to this new reality, but our overall promotional activities continue to be impacted in Q3. As expected live face-to-face interactions with healthcare providers were very limited, with virtual engagements becoming the norm. But our net overall promotional interactions combining both live and virtual were down from our pre-COVID…

Thanks, Jeff. I will begin with a brief summary of our financial results for the third quarter of 2020. Please note that I will make comparisons to Q2 and Q1 2020, 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 today that includes our consolidated financial statements. For the third quarter of 2020, we reported a net loss based on GAAP of $31.5 million, with $0.79 per share. Our GAAP gap net income for Q2 2020 was $3.4 million and our GAAP net loss for Q1 2020 was $16.99. On a non-GAAP basis, we just adjusted to remove the impact of stock based compensation. We reported a net loss of $23.9 million or $.60 per share for the third quarter of 2020. Gross revenue from NERLYNX sales was $58.6 million in Q3 2020, versus $57 million in Q2. As Alan mentioned, net revenue from NERLYNX sales was $49.3 million, a slight increase from net sales of $48.8 million in the second quarter of 2020. In Q3 2020 we also recognize $1.5 million in royalty revenue from our global partners. Our gross to net adjustment in Q3 was about 15.8%, an increase from the 14.4% gross to net adjustment in Q2. The increase was driven mostly by higher rebates due to our price increase in August. Cost of sales for the third quarter was $10 million, which included the amortization of milestone payments to the licensor of neratinib of approximately $2 million. Going forward, we will continue to recognize amortization of the milestone payments to the licensor for about $2 million per quarter as cost of sales. For full year 2020, Puma anticipates that NERLYNX net sales will be…

Thanks, Maximo. We continue to recognize that we need to improve NERLYNX's sales growth. And that the COVID-19 pandemic is presenting challenges to us with respect to achieving that growth. Puma senior management in cooperation with the commercial committee and the Board of Directors continues to remain focused on NERLYNX's revenue and sales growth in 2020 and beyond. We are continuing to adapt to the virtual commercial environment that we have needed to pivot towards due to the COVID-19 pandemic. And we are hopeful that changes to our commercial infrastructure will make a positive contribution to NERLYNX's sales growth. 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 Q&A. operator?

Thank you. At this time, we'll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Ed White with H.C. Wainwright & Company. Please state your question.

Good evening. Thanks for taking my question. So maybe the first question would just be, perhaps I didn't hear it and you said it. But on the exon 18 mutations, can you just go over that again with the – is it you're enrolling the 30-patient in the cohort now. And when would we expect to see data from that cohort?

Yes, hi Ed. So in terms of the EGFR exon 18 mutations, this is part of the SUMMIT trial. So, the first value we had to hit was one out of seven, in the next one we had to hit with four out of 18. So as you can see out of 11, we had four. So we hit the bogey to continue enrollment. So the enrollment will be continuing. So it will be the current 11 plus additional. And we've been very pleased with the enrollment. I mean, if you look at the clinicaltrials.gov, I think we've got somewhere in the neighborhood ballpark of 45 to 55 sites in the study. These 11 patients were probably enrolled less than 10 of them. So since we've got the data where going out to the other sites and making them aware of this data, because obviously knowing that it's active, you're going to be more interested in enrolling patients. And that has definitely helped with the enrollment in the study. So you've got a number of lung cancer, specific conferences you're in the first half of next year like in Q1 and SUMMIT Q2 as well. So we'll continue to present updates to that during that time. So I would envision both Q1 and Q2, you could see updates to this data and that should be certainly north of the 11 patients. I can't speculate as to exactly how many we would have efficacy data on. As we approach, I'll be happy to provide more transparency on that.

Okay. Thanks, Alan. Yes, I was trying to think about timing to path to submission. So I don’t know if you have any thoughts on that at this time?

Obviously, we can't. Obviously we can't speculate on that. And so we've had a meeting with the FDA, which we're planning to do sometime next year. But – and obviously it will be enrollment dependent as well. But again, I've been very pleased that as we go out to the sites in SUMMIT and present this data, the first response we're hearing from people is, I've got a patient, I'm treating and what either when they progress or, I'm going to call them up and bring them in and talk to them about this. So we're definitely getting the right feedback that I would like to see, which is them trying to pull patients in for this. I just can't speculate as to what that number is just yet.

Okay. And that pre-NDA meeting for SUMMIT that you're expecting that still in the first quarter or second quarter of next year?

For the exon 18 cohort, we haven't scheduled a meeting yet. So I don't know when that would be. For the HR-positive breast cohorts, assuming we complete enrollment in the first half of 2021, which that cohort has been picking up very nicely in terms of enrollment. I would imagine in that ballpark first after 21 would be when we would be having the pre-NDA meeting.

That's the one I was talking about. Sorry about that.

Yes, sure. No problem.

And perhaps you could just talk about sales in Europe and royalties there. It seems like they're going through the same thing that we're going through here in the U.S. as far as the pandemic and lockdowns and everything. But if you have any insight on how sales are looking there in the various launches that you have to – ongoing, like your partners have ongoing.

Yes. Absolutely. So, our partner in Europe is Pierre Fabre. And they've been a really great partner to us. It's been a great relationship. What's different about launching in Europe versus the U.S. is, when you launch in the United States, you launch in all 50 states at the same time. Whereas in Europe, you have to wait for reimbursement for each individual country. So I believe it's 32 countries in Europe, kind of launched them one by one. So it's a little more protracted. So we haven't launched in all of the European countries, I believe we only launched in like four or five of them. And so far we've been seeing good sequential growth. Now you're correct, that they are going through lockdowns, et cetera. I don't know what impact that's going to have. But they're continuing throughout 2021 to launch in a lot of new countries. So you're going to have that as a source of growth as well, which is new launches in new countries and Pierre Fabre got a really great lineup of new countries that are launching in 2021. So I'm optimistic on them in terms of their execution, but I'm also optimistic on their growth in the new countries as well as the existing.

Thanks Alan. In perhaps the last question for me is just on SG&A expenses. So with the virtual sales model, that you're using now combined with whatever meetings you can get in person. I'm just wondering how we can think about the sales expenses going forward? And how that's impacting? It would seem that I've been hearing that some companies are cutting back on their salesforce as they move to a more virtual model. And just want to get your thoughts on expenses or what can be done to become more lean on the sales side? Thank you.

Yes, Jeff. Do you want to help that?

Yes. No question. I think it's a very good question. And certainly, as I mentioned up front, we're working very hard to be do have the field force operate in a much more effective way in the virtual environment. As part of that virtual environment, we are certainly seeing expenses SG&A come down. When you have a lack in travel, live engagements. So we are seeing those expenses come down. In addition, we're being very smart about head count and making sure we're very smart with ensuring that we've got the proper number of FTEs out there. We have some decline in FTEs and we're being very diligent as we think about filling those FTEs, thinking about that new future model. So we do expect to see continued efficiencies in the SG&A line going forward for sure.

And Ed, I would also just add to this. Look, one of the big costs you would get from a salesforce obviously is travel, right? Because, you're going to have a salesforce, is going to have a territory that might span over three states or something. So they're going to be driving and flying and et cetera. Clearly with a reduction in the number of in-person visits that you can do that travel expenses a lot lower. And I would love to be able to tell you that I think things are all of a sudden going to turn around and we're going to be able to start doing more, in-person meetings, live. I just don't think that's going to happen for a long period of time. So I would imagine, because of that, you're likely to see the SG&A levels continue to be low and not see a huge uptick in travel-related expenses.

Great. Thanks for taking my questions.

Our next question from Yigal Nochomovitz with Citi. Please state your question.

Hi, this is Samantha on for Yigal. Thanks very much for taking the question. Just first on the non-small cell lung cancer, EGFR exon 18 data that the two patients that did not have confirmed PR. So just wanted to clarify, are those able to be confirmed or are those two patients now off study?

That is a good question. I don't know the answer to that off the top of my head. I will need to come back to you on that.

Okay. Okay. Understood. And then just as you're enrolling the – up to the 30 patients, I think you said in this cohort, and you're moving towards the pre-NDA meeting with the FDA or the – to look at the accelerated approval. Is it your understanding that the SUMMIT trial in those 30 patients will be sufficient to support an accelerated approval? Or do you anticipate having to run an additional cohort or an additional trial?

I obviously can't speculate until we meet with the FDA. I would not imagine we would have to go run a separate trial. If the FDA wanted us to have, 50 patients instead of 30, we can just continue enrollment in the current cohorts. When we met with them regarding, the SUMMIT trial which was last year, we discussed with them, both the breast trial, the breast cohort and the surgical cohorts. And they didn't ask us to run a new trial. They just asked us to kind of continue enrolling the existing trial. So I wouldn't imagine having to go set up a completely new trial. My anticipation would be again we meet with the FDA, but based on our previous, my anticipation would just continue to enroll the existing one.

Okay, got it. That's helpful. And then just switching to NERLYNX sales a bit, just curious when you talk about how you're going to work to increase growth in sales, where's the focus for your salesforce? Is that on the extended adjuvant indication or is that on the metastatic indication and what can you do between the two of these to increase growth? Is it the same plan or do you have separate priorities there?

Jeff, you want to handle that?

Yes. Happy to know, very good question. And let me just say, we obviously launched NERLYNX in metastatic in the first quarter of 2020. Obviously, we launched along with several other competitors. We do believe that NERLYNX will play a significant role in the metastatic setting. But obviously it's going to take some time to determine the sequencing of drugs given the new entrance. We do know that in the metastatic setting, unfortunately, patients do progress. So what's going to be – it's going to take us to understand how that sequencing progresses, but obviously patients will ultimately progress through multiple therapies. Our real focus and what we'd like to see is to prevent patients or give them a better chance of preventing them from becoming metastatic. And so our focus is largely in the extended adjunct setting. And given that you asked a very good question, what are we doing to accelerate growth in the extended adjuvant setting? The marketing and sales team are working very hard to reposition the brand, tighten up that focus and execution and adjust resource allocation to better align with the current market conditions. As Alan mentioned, that I mentioned, we are excited about the new publication of the ExteNET final efficacy results. If you look at those results, what that showed was exploratory analysis focused really in higher risk patients. And those high risk patients that were reported were those that were HER2-positive HR positive less than one year with no PCR. And in that population, the author is described an absolute IDFS or invasive disease free survival benefit of 7.4% at five years, on absolute overall survival benefit of 9.1% at eight years. In addition, there were fewer CNS reported events in the NERLYNX arm. So when you think about that higher risk population, we are very happy with the results that we have seen there. And we believe that using that information, we now have a much more compelling message for clinicians to focus in on both clinically, as well as what the control data being published to also help the tolerability side of the drug as well. And as you look at the broader population, we think NERLYNX can play a very important role in a broader HER2-positive population. But even in this high-risk population, there is very, very significant opportunities for growth. We have just now in the last couple of weeks began speaking and focused on that population. And the early feedback from clinicians has been positive. It's early, but it's been very positive. So I hope that helps.

Yes, thank you. I appreciate all the color.

Thank you. Our next question comes from Kennen MacKay with RBC Capital Markets. Please state your question.

Hi, thanks for taking the question. Can you maybe talk to how new patients starts trended in Q3 versus Q1 and Q2 or trends in new to brand or new prescriptions obviously saw the analysis of bottles sold and the present of new patients starts at the lower, just wondering again how a new prescription is trended versus retail. Thanks so much.

Yes, thanks Kennen. New patient starts trended down in Q3. Obviously that was impacted by the pandemic. We obviously saw this in office distributing as well as we were certainly hearing less patients were coming through the in-office, the places that we have the in-office dispensing as well. So I think the trend was somewhere in the range of five-ish percent with the decline in NPS quarter-over-quarter.

Got it. Thanks a lot.

Thank you. Our next question comes from Laura Christianson with Cowen and Company. Please state your question.

Hi, thanks for taking my question. I guess just to follow up on the previous one. There are some oral oncology drugs that have been seeing resilience, if not strength during COVID. I was wondering if you could just give us a little bit more information about the market that you're serving and why the COVID reaction might be different there, whether, they need to be in person to start on drug or do any lab work, anything that might explain the different things?

Laura, that's a very good question. And let me address that. And Alan can weigh in. So let me just stress that NERLYNX is a very promotionally sensitive product. And as discussed previously, COVID has caused a reduction in our overall HCP interactions, which we believe has led to some softening in demand, but let me be clear. We're not waiting for COVID to go away in order to change these trends. The team has been working very hard to reposition a brand, obviously tighten up our focus and execution. And as I just mentioned, we recently now have brand new data from ExteNET and control published in peer review journals. And as you think about this, clinicians make decisions and patients make decisions on the risk benefit of those medications. We believe now with that new information, our messages are much more compelling, both from the clinical benefit side, as well as the tolerability side for NERLYNX. As I mentioned, that data has just now come into our hands in the last couple of weeks, the team is really focused in on that. And in those patient groups, we feel very good about being able to make a positive impact moving forward and early interactions with KOLs have been positive.

Perfect. That's helpful. Thanks.

Our next question comes from Geoff Meacham with Bank of America. Please state your question.

Good afternoon. This is Jason on for Geoff. Thank you so much for taking the question and graduations on the results. In talking a little bit about driving growth, what do you think are the biggest near-term drivers in terms of likelihood and the overall, I guess, ability to kind of move the needle. And then if you could – could you discuss a little bit about the gross to net trends moving forward and kind of the ability to drive sales with price increases and what that looks like. Thanks so much.

Okay. So Jeff, if you want to handle the first part of that and then Maximo can weigh on the gross-to-net.

Yes. Jason, good question. And I go back to, I don't want to repeat myself too much, but I would say we are in terms of near-term growth opportunities. To us, it really is about focusing in on the new data that we have. We firmly believe that NERLYNX has a positive impact in a very broad patient population. So we feel good about those opportunities. But more specifically, when you look at the recent data that was just published in those higher risk patient populations, the data on IDFS, OS, in CNS is very, very positive. So our focus with the team is to look at those higher risk patient populations. And those patients are the ones as you know, that do progress that have more events more quickly. So having an active agent, you would expect to see a separation again, more quickly. And that's what we saw in the data. I also want to stress that we feel good about NERLYNX in a broader population, but even in that higher risk patient population, there is very, very significant opportunities to grow this brand, not only in terms of patient penetration, but also in length of therapy. And the control data helps us with the length of therapy and the clinical data helps us with the penetration of overall patients. And Maximo, do you want to weigh in on the gross-to-net please.

Yes. So our gross-to-net as I mentioned before, our expectation for Q4 is somewhere around between 17% and 18%. Quarter-over-quarter we're going up a little bit of 15.8% in Q3, 14.4% that is driven by the pricing increase that we took in Q. So we expect that trend to stay around that. Now also you have to remember in Q1, we usually reflect a higher gross-to-net to copays on and so on. So we will come up with that at the end of the year.

Great. Thank you so much for the color. Really appreciate it.

Our next question comes from Paul Choi with Goldman Sachs. Please state your question.

Hi, this is [indiscernible] on for Paul. First, I was hoping you could talk a little bit more about how you think about the clinical bar in exon 18, non-small cell lung cancer and how you're going to approach that conversation with the FDA?

Yes, well, look, as you mentioned during the slide presentation, the only drug that is currently approved in lung cancer has the exon 18 mutations and its label is afatinib, which is zero drift. So, the data on that is pretty well published in terms of what it looks like. And again, we're focusing on the patients who've already been treated with an EGFR TKI. So in that population, the bar appears to be a 10.5% response rate. So we're right now at a 40% response rate, which is really encouraging obviously as we get more data we'll see where that goes. It could stay the same because they're down or could go up. We just have to wait and see. If we continue to maintain, the same type of effect where we're seeing a large magnitude of difference from afatinib in and response rate, we're continuing to see an encouraging duration of response in PFS. I would feel very comfortable having that conversation with the FDA.

Okay, great. That's helpful. And then I think you mentioned that axon 18 represents about 5% of the EGFR mutations, but to what extent is it identified and diagnosed in patients? Is that part of the normal screening process?

Yes. In lung cancer, we're very fortunate because everybody is getting screened. I recognize in some tumor types the screening rates are very low. In lung cancer, from what we have seen a 100% of these patients get screened. So all of the screens pick up the specific EGFR mutation. So they know if it's like exon 20 insertion, Del19 deletion, a T790M, an L-858 they know exactly what it is. So it's already picked up in the current screens that are out there for lung cancer.

Great. That's helpful. Thank you.

Ladies and gentlemen, that's the end of our question-and-answer session. I'll turn it back to management for closing remarks.

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

This concludes today's conference. All parties may disconnect. Have a good day.