Good afternoon. My name is Kevin, 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 the call over to Mariann Ohanesian, Senior Director of IR for Puma Biotechnology. You may begin your conference.

Thank you, Kevin. Good afternoon, and welcome to Puma's conference call to discuss our financial results for the first quarter of 2021. 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 first quarter 2021 financial results. That news release, the slides that Jeff will refer to and a webcast of this call, are accessible via the homepage and Investors sections of our website at pumabiotechnology.com. The webcast and presentation slides will be archived on our website and available for the reply 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 our annual report on Form 10-K for the year ended December 31, 2020. 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, May 5, 2021. 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 first quarter 2021 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 first quarter of 2021 of $98.2 million. Total revenue includes net U.S. NERLYNX sales as well as license fees and royalties from our sublicensees. Net NERLYNX sales were $45.8 million in the first quarter of 2021, representing declines from the $50 million in net sales reported in the fourth quarter of 2020 and $48.6 million reported in Q1 of 2020. Royalty revenue was $2.4 million in the quarter of - first quarter of 2021 versus $2.6 million in the fourth quarter and $0.6 million in the first quarter of 2020. On our last call, I noted that Puma and sublicensee, CANbridge Pharmaceuticals, had mutually agreed to terminate our agreement covering commercial rights to NERLYNX in Greater China and that the agreement with our sublicense, Pierre Fabre, was amended to include development, manufacturing and commercial rights in that territory. As a result, our first quarter 2021 results include $50 million of license revenue received from Pierre Fabre for the addition of the Greater China territory, while cost of sales for the first quarter of 2021 includes a onetime termination payment to CANbridge of $20 million. During the first quarter of 2021, we continued to experience challenges brought on as a result of the COVID-19 pandemic as well as the decline in NERLYNX bottles sold in the quarter due to the holiday-related decline in new patient starts that were seen in Q4 of 2020. As Jeff will discuss in more detail in his remarks, due to the vaccinations being done in 2021, we are optimistic that there will be a reduction in the commercial limitations that have been negatively impacting our commercial performance since the pandemic started, and we are hopeful that the…

Thanks, Alan. Hey, I appreciate it, and thanks to everyone for joining our first quarter earnings call. Before I move into the commercial review, just a reminder that I will be making forward-looking statements. The commercial organization remains focused on strengthening the position of NERLYNX in early-stage breast cancer, with the goal of improving the risk-benefit perception with clinicians and patients as well as increasing new patient starts in this underpenetrated market. As mentioned previously, we believe that NERLYNX can play an important role in the treatment of metastatic breast cancer, but our focus is on extended adjuvant with the goal of preventing or delaying patients from becoming metastatic. We take this goal very seriously and know that more must be done to help patients and their families in this battle with early-stage breast cancer. I am pleased with the foundational work that has been completed and largely came to fruition a few months ago. We look forward to seeing the impact of this work with the goal of driving future growth and increased patient penetration. As a reminder of this foundational work, we published the interim results of the CONTROL study in the September edition of Annals of Oncology and published the final efficacy results from the ExteNET trial in the October edition of clinical breast cancer. These data sets were also discussed and well represented at both San Antonio Breast and Miami Breast, which, as you all know, occurred in December and March, respectively. I highlight this clinical information because we feel it is very important as it illustrated the benefits of dose escalation as a way to significantly improve the tolerability profile of NERLYNX and it also highlighted the potential of invasive disease-free survival, OS and CNS benefits seen in an exploratory analysis of patients at heightened…

Thanks, Jeff. I will begin with a brief summary of our financial results for the first quarter of 2021. Please note that I would make comparisons to Q4 and Q3 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 and includes our consolidated financial statements. For the first quarter of 2021, we reported net income based on GAAP of $16.5 million or $0.40 per diluted share. Our GAAP net losses for Q4 2020 and Q3 2020 were $15 million and $31.5 million, respectively. On a non-GAAP basis, which is adjusted to remove the impact of stock-based compensation, we reported net income of $22.4 million or $0.55 per diluted share for the first quarter of 2021. Gross revenue from NERLYNX sales was $56.5 million in Q1 2021 versus $60.1 million in Q4 2020. As Alan mentioned it, net revenue from NERLYNX sales was $45.8 million, a decrease from net sales of $50 million in the fourth quarter of 2020. In Q1 2021, we also recognized $15 million in license revenue related to an upfront fee to include Greater China in our sublicense agreement with Pierre Fabre. Royalty revenue was $2.4 million in the first quarter of 2021 versus $2.6 million in Q4 2020. Our gross to net adjustment in Q1 2021 was about 18.9%, an increase from the 16.8% gross to net adjustment in Q4 2020. The increase was driven mostly by higher co-pay and coverage GAAP expenses, largely driven by seasonality. Cost of sales for Q1 2021 was $29.6 million, including the $20 million fee paid to CANbridge to terminate our sublicense agreement as well as approximately $2 million for the amortization of intangible assets related…

Thanks, Maximo. The COVID-19 pandemic has presented commercial challenges to Puma, which has made it difficult for the company to achieve NERLYNX sales growth. The company is hopeful that the vaccinations that have been occurring in 2021, and will continue to occur throughout the year, will reduce these barriers, which should improve the ability of our commercial team to access and interact with health care providers to increase their awareness of the NERLYNX data. Puma senior management in cooperation with the Board of Directors continues to remain focused on NERLYNX revenue and sales growth in 2021 and beyond. We look forward to updating investors on this in the future. There continues to remain a significant unmet need for patients battling breast cancer, lung cancer and other solid tumors. We, at Puma, are committed and passionate about finding more effective ways at 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. Kevin?

[Operator Instructions]. Our first question today is coming from Yigal Nochomovitz from Citigroup.

This is Carly on for Yigal. First, on the guidance you provided, can you expand on what assumptions are driving the acceleration in revenue growth that you expect to see in the second half of the year?

Carly, this is Jeff. I'm happy to expound on some of those assumptions as to why we see growth going forward. A couple of general comments here. Remember, this is a very promotionally sensitive product. And obviously, we've got new clinical data that really came to fruition in the fourth quarter of the year. So as I think about promotional sensitivity, a big - one of the driving factors behind NERLYNX growth is our belief that we will see increasing access in the second half of this year. We are starting to see some early increasing positive signs. It's slow at this point, but we do expect the second half of the year to be much different than the first half. Obviously, to grow an oncology brand, the best thing you can do is communicate new clinical information, and we feel very good about the clinical information we published towards the end of last year. On top of that, we also, as I mentioned in my remarks, we expect to see increasing adoption of dose escalation. That improves the patient experience, enhances persistence and compliance and certainly will benefit patients and also us commercially as well. And then, Carly, one last point I want to point out here as well is that we've done some early market research with patients. And it will go as no surprise to this group that patients battling early-stage breast cancer want to do more. And as we've engaged in early discussions with them, certainly, they want to do more. They're intrigued by our new clinical information. And it seems to be compelling for them to want to discuss a little more proactively with their clinicians moving forward. So those are the drivers that we see going forward that can inflect the current trends that we have.

Okay. Great. That's very helpful. And then I guess just a follow-up sort of on the commercial strategy. Are you, at this point, more focused on sort of getting existing prescriber to use NERLYNX more aggressively? Or is the focus on reaching new prescribers? Just curious what you see as sort of the bigger opportunity for driving sales growth going forward?

Yes, Carly. We - the simple answer is both. we're certainly having current utilizers continue to have good experience and feedback from patients and the like as well as physicians that have not used NERLYNX ever or have not used it recently to get them to reengage. And clearly, the clinical data that we published and also was presented at San Antonio and Miami Breast really found - really forms the foundation for us to expand that utilization going forward.

Yes, Carly, this is Alan. If I can kind of add a few things here. As Jeff mentioned, one of the things that's very important for us is to get physicians to adopt the use of the dose escalation or at least become aware of it because it ends up giving them a more favorable view of the drug. And what we noted - what we've noted in our analysis is that the physicians who use the dose escalations tend to prescribe NERLYNX to more patients than the ones who don't. So - and it's pretty dramatic ratio. It's not like a 10% difference or something. To the promotional sensitivity point, that Jeff's talking about, we also did an analysis looking at the physicians who we call on, we don't call on, we call on infrequently and we call on it frequently in terms of the number of patients they put on the drug. That similarly shows a very dramatic increase in terms of the number of patients that the physicians put on the drug, depending on how frequently we meet with them. So as we're looking to be meeting with more physicians because of access improving post vaccinations and things like that, we have a good degree of confidence that, that's going to end up resulting in the sales growth that we're looking for. And then to the point you were asking regarding new physicians, we do see every quarter a decent percent of our new prescriptions of our NERLYNX coming from physicians who have never written a prescription before. So for instance in Q1, I believe, I think it was somewhere around 29% of the NRX came from physicians that had never written a prescription before. So given that we're out almost in year 4 of launch, that still shows you there's quite a large opportunity here for us to still reach the people who've never written a prescription.

Our next question is coming from Marc Frahm from Cowen & Company.

I guess one follow-up kind of on the last conversation for Jeff is just the fraction of patients on low dose declined in the quarter. Is there an explanation there? I don't know, mix of physicians or something? Just kind of what do you think is going on there since that seems to be a key to ultimately have some growth in the franchise?

Yes, Marc, no, thanks for the question. I wanted to point out as we refreshed the data, we did see the blip in Q4, which really like. As I step back and look at the curve of the uptake, in general, we continue to see that stair-step moving in the right direction. As we pinpoint Q4, we have the data on CONTROL presented at San Antonio Breast. We had some additional noise level there. So we feel very good about that blip in Q4. But we also see, in general, even in Q1, that was also the highest quarter beyond Q4. And we continue to get very good feedback from clinicians. From the podium as physicians, KOLs talk about NERLYNX, they continue to talk more and more about dose escalation. So I am not concerned about that small variability between quarter-over-quarter. I will - and I do expect to see that, that will continue to move forward and upwards going forward. So I hope that helps?

Okay. And then maybe this is probably for Alan. Just on the HER2-mutated ER-positive trial. Just can you work through kind of disclosure plan there when investors are likely to hear kind of the results of it? Are we going to hear the data first and then ultimately, the FDA meeting? Or are you likely to kind of hold things back until after you've had an FDA conversation?

Yes, Marc, thanks for the question. So as I mentioned in the prepared remarks, we obviously have the randomization, which is fulvestrant in 1 arm, fulvestrant plus trastuzumab in the other arm, neratinib plus fulvestrant, plus fulvestrant in the other arm. The initial is 7,7 and 7 for the first stage of the Simon's 2-stage. That is now fully enrolled. I would say we are likely to announce or present at a conference the initial results of that data whenever we get it, that would more likely be the way we would go. In terms of the timing of an FDA meeting, as you know, you apply for meeting, you'll wait for it to be granted, there's kind of a time lag there. So I don't know that we would wait and do it as kind of all at the same type of thing. It would probably make more sense to just get the data out there, so it's known.

Our next question today is coming from Kennen MacKay from RBC Capital Markets.

Two questions, sort of expanding on the conversation on the reduced dose. Just wondering if you had a sense of sort of which reduced doses are being used, if that's largely at 200 or if physicians are more frequently starting at as well as 160, any kind of breakdown there would be helpful? And then, again, any kind of perspective on the pace of increasing dose would be incredibly helpful. It does look like that is really helping the traction here. So great to hear? And then just a final question. Wondering any feedback on the preferred antidiarrheal combinations that are being used by physicians out there commercially? Obviously, loperamide has been successful, but a number of other options out there as well?

Yes, Kennen, appreciate the question. A couple of things. In terms of dose escalation, in terms of what's being used, typically, they're following the dose escalation schematic that was presented in the CONTROL study, which is starting with 3 pills for a week, moving to 4 pills for a week and then going to 6 pills thereafter. Certainly, as you talk to clinicians, some do vary that as needed. But if you ask me the predominant method of dose escalation, it is 3, 4 and 6 as presented in our CONTROL data itself. Likewise, in terms of antidiarrheal preferences there, you hit it. Loperamide is still the number one preferred and utilized antidiarrheal strategy, that being - following dose escalation with PRN loperamide. Certainly it goes without saying, you talk to other clinicians, and they have other ways of dealing with it. The net-net result is we are seeing increased perception of tolerability of NERLYNX and better patient persistence, which is what we're looking for across the board.

Yes, Kennen, it's Alan. To add to what Jeff is saying, what we tend to see with physicians is kind of the schematic, if you will, is they use the dose escalation. If they do see diarrhea, they use loperamide. If the loperamide does not work, then they may incorporate budesonide or colestipol or something like that. I would say I don't really hear a whole lot about - I haven't really seen as much activity in terms of the budesonide and colestipol. Most physicians have said that the dose escalation in just using loperamide, if needed, it tends to work quite well.

Got it. And maybe one other commercial question, if I could. Do you have a sense of the sort of breakdown of prescribing between academic and sort of can you maybe clinics? I would imagine just is being early breast cancer, it's majority in the community, but I would love to hear how that breaks down as well?

Kennen, I like the question, and I like when you answered the question yourself as well. You're absolutely right. We see the breakdown mark - you are right, by the way. So great submission there. We see it more in the community oncology. Given it is early-stage breast cancer, the vast majority that's treated in the community setting, and that is the breakout of our sales as well.

Yes. So Kennen, as you know, it tends to be that the early stages treated in the community, as you accurately stated. And then as the patient gets metastatic and especially towards later lines, that's when they tend to go to the academic centers.

Our next question is coming from Geoff Meacham from Bank of America.

This is Alec on for Geoff. First is, when you look at the commercial access disruptions caused by COVID, how do you see scripts potentially recovering once the pandemic hopefully subsides? Will it be sort of a spike over a quarter or 2 or maybe something more gradual? And then any color you can provide on the global partner launches during the quarter in terms of feedback you've been receiving from the field and whether adoption in any particular geography stands out so far would be great? And then I have a follow-up.

Sure, Alec. Let me comment on how we see the potential increase based on access returning. And just let me give you a teeny bit of history here as well as it probably won't surprise this group. But prior to the pandemic, we saw about 90% of all interactions were live, only about 5% to 10% were virtual. Obviously, with the pandemic, we saw that completely switch with the vast, vast majority being virtual and then a very few percent being live. We have started to see that switch as we look at interactions with customers. We're starting to see more of a 70%-30%, still heavily biased on virtual, but you see the live visits coming back. The important element to all of this, though, is net-net, we still saw about a 50% reduction in overall share of voice pre-pandemic to even now. And so those are all the commercial efforts and the sales force's efforts to try to improve our access and increase our share of voice, but we're still dealing with relatively significantly reduced share of voice. In terms of when it's coming back, this is - it's - I make a statement that I believe the second half of the year will be much better than the first half, but this is really a local situation. You've really got to know it locally, and you'll have pockets will start to open up, some other pockets that will close down a little bit. So I do expect to see more of a gradual increase over time as we're starting to hopefully see access now. And I'd expect that to accelerate in the second half of the year. But I don't expect a magic date of July 1 when all of a sudden, everything opens up and we see a drastic spike. It's going to be more of a steady or gradual increase from my perspective.

Yes. Alec, if I can add to that. Exactly what Jeff is saying, it's going to be more gradual, and it's really dependent on individual states and individual cities in terms of how well they're doing with the vaccinations. The states that are doing better with them and getting higher adoption of it seem to be more likely to open up and increase access. And that increased access can either be physicians attending peer-to-peer events and things like that, where perhaps they wouldn't. In fact, they wouldn't, or it could also be them allowing the reps to actually come in so they can meet with them in person rather than doing something virtually. But it really is dependent state by state. And as Jeff said, I think we think it's going to be gradual over the course of the year. We don't anticipate it's going to be some magic date that all of a sudden has a step function up. And - yes, in terms of your second question, regarding the global partnerships. I would say that we are definitely seeing COVID having an impact there. Certainly, in Europe, the countries that are having issues with COVID, where we're seeing those having challenges. Other ones that are doing better with it are obviously doing better. I think it's too early to call what's going to happen in the China launch because I think that's just in its initial stages. And I think we'll be able to give much better color on that in future earnings calls.

And Alec, let's say - sorry to add to those comments. So I talk about a global statement about access improving, but it's really a local decision. We say the same thing with countries across the world. Germany, for instance, in say, Q3 or Q4 of last year was fairly open, 30%, 40% opened. And then in Q1, they shut down again. You've had some spikes in Italy and other places where access has been limited in the U.K., where you've seen spikes where it shuts down pretty quickly. So we really have to dive deep in each of those launches, but we do feel good about all the work that the partners are doing. And I would say, overall, we do expect to see the access improve globally as well moving forward.

That makes sense. I appreciate all the color. And one more question, if I may. I'd be interested to see if you've sort of weighed the top line impact of more patients starting on a lower dose and on the flip side, expectations of patients staying on NERLYNX longer. Curious just to see how you're thinking about these 2 factors sort of netting out on a revenue per patient basis?

Yes, Alec, a very good question. And I think the one huge thing for us is, as you know, and I've said, the commercial strategy is to change the perception of the risk-benefit perception of NERLYNX. We really believe that the new clinical data I talked about can really highlight the benefit of NERLYNX, the clinical benefits, especially in those patients that more increased risk. And we really believe that the CONTROL data can really improve that perception of tolerability. Now if you think about dose escalation, you're talking about a delay of only 2 weeks before you get to the full dose, right? You start out at 3 pills instead of 6, and then you got 4 pills instead of 6, and then by the third week, you're at 6 pills. And so the actual commercial impact is relatively small on dose escalation. But the important element of this is that physicians and patients, that are exposed to dose escalation, have a much better perception of the brand. And at every given point, we see higher second refills or first refills, higher patients at 6 months and a longer overall length of therapy that is beneficial to us, but also certainly beneficial to patients as well.

Next question today is coming from Gena Wang from Barclays.

This is Sheldon on for Gina. I have maybe 2 questions. One is that we recently heard from some KOLs that breast cancer patient, the metastatic - in the metastatic setting, may receive more regimens with NERLYNX or loperamide because those are all oral during the pandemic. Because those - a lot of the hospitals are closed and physicians don't want to deal with injection or the side effects, so they opted for more use of oral regimens. Have you seen the - like a better-than-expected uptick in NERLYNX in the metastatic setting during the past year or so? And is there an opportunity that you can take advantage to maybe promote all the convenience of NERLYNX? And my second question is on the HR-positive breast cancer cohort of summits. You will meet with FDA after the initial top line data of the 21 patients. Do you think that you can potentially get some advanced accelerated approval after the 21 patients? Or you need - FDA still want to see the full data after the cohorts are extended based on the 7 design?

Yes. Let me give you some perspective on the metastatic trends and what we've seen. And as I mentioned before, we believe NERLYNX can certainly play an important role in the metastatic disease, and we feel very good about our data. With that said, oral is a benefit. However, metastatic patients, given that they're in a very serious state in their disease, are more likely to be compliant on orals and/or IV formulations as well. So we don't see quite as much benefit on the oral side. Now as you may recall, we launched or received the approval of NERLYNX and for the metastatic indication in February. And HER2 received an approval in late December and Tukysa received their approval in April. So you've got significant new options for patients, which is wonderful for patients, but a very, very crowded space. So we have not seen significant uptake in metastatic. In fact, you've seen some slight downward trends given the new options that are out there. So hopefully, that helps with your perspective.

And then to answer your second question regarding the HER2-mutated breast. So you're correct, we have fully enrolled the 7,7, 7 to 21 patients. Obviously, we need to wait to see if the cohorts expand and the way it works is, you enroll 7 patients. If you get 1 or more responders in that cohort, you then expand it. We don't yet know which cohorts are going to expand or not expand. So it's difficult to know what the FDA is going to want from an accelerated approval strategy, we won't know that until we meet with them. And obviously, we can't meet with them until we get the data. So I think we need to just wait to see what the data shows. If all arms expand, if some of the arms expand, et cetera, and then go from there.

We've reached the end of our question-and-answer session. I'd like to turn the floor back over to Mariann for any further or closing comments.

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

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.