Good afternoon. My name is Karen, and I will be your conference call operator today. [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, Karen. Good afternoon, and welcome to Puma's conference call to discuss our financial results for the first quarter of 2022. 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 2022 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 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 SEC from time to time, including our annual report on Form 10-K for the year ended December 31, 2021. 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, 2022. 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 2022 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 2022 of $45.7 million. Total revenue includes product revenue net, which consists entirely of NERLYNX sales as well as license fees and royalties from our sub-licensees. Product revenue net was $40.7 million in the first quarter of 2022, which represents a decline as expected from the $51.0 million in revenue -- in product revenue reported in the fourth quarter of 2021 and $45.8 million in product revenue reported in Q1 2021. Product revenue for the first quarter of 2022 included approximately $4.3 million of inventory drawdown at our specialty pharmacies and specialty distributors. Royalty revenue was $5 million in the first quarter of 2022, an increase from $2.9 million in Q4 2021 and $2.4 million in Q1 2021. We recorded no license revenue in the latest quarter. We reported 2,680 bottles of NERLYNX sold in the first quarter of 2022, a decline from the 3,454 bottles sold in Q4 of 2021. As we noted on last quarter's call, bottles sold in the fourth quarter included an estimated 345 bottles representing inventory stocking at our specialty pharmacies and specialty distributors. We estimate that inventory stocking decreased by approximately 282 bottles in Q1 of 2022. In Q1 2022, new prescriptions were up approximately 17% compared to Q4, while total prescriptions were down approximately 1.7%. Jeff will provide further details in his comments and slides. I will now provide a clinical review of the quarter, and then Jeff Ludwig will add additional color on NERLYNX commercial activities. Maximo Nougues will follow with highlights of the key components of our financial statements for the first quarter of 2022. As we have mentioned in our prior calls, Puma has an ongoing basket trial…

Thanks, Alan. 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. So let me start by reinforcing our commitment and our passion about helping patients in their battle with breast cancer. We believe that NERLYNX can play a key role in both early stage disease to prevent reoccurrence after adjuvant trastuzumab-based therapy as well as in metastatic disease. Commercially, we remain focused on 3 areas: number one, leveraging and communicating the evolving positive clinical data of NERLYNX; number two, engaging and educating patients about the risks and benefits of NERLYNX; and three, increasing our impact through field force execution and evolution. I'm happy to see progress being made on all 3 fronts. We saw steady increases in our call activity in Q1 as access increased in parts of the country, and our sales team became more comfortable in their new geographies following our Q4 reorganization. Over 60% of our calls made in Q1 were live versus virtual, and we saw a steady increase in live calls versus virtual calls throughout the quarter. Now the ebb and flow of COVID has been hard to predict, but we are hopeful this trend will continue. In addition, we increased our outreach to patients and various advocacy groups, adjusted our personal and nonpersonal promotional mix and stayed focused on communicating the clinical benefits of NERLYNX, including the previously announced updates to the NCCN clinical practice guidelines for the treatment of breast cancer. This market remains underpenetrated, and we are committed to doing more to help support women battling breast cancer. With that high-level update, let me transition to some of the U.S. commercial slides. Once I finish my remarks, I will turn the…

Thanks, Jeff. I will begin with a brief summary of our financial results for the first quarter of 2022. Please note that I will make comparisons to Q4 2021, which we believe is a better indication of our progress as a commercial company and year-over-year comparisons. For more information, I recommend that you refer to our Q1 2022 10-Q, which will be filed today and includes our consolidated financial statements. For the first quarter of 2022, we reported a net loss based on GAAP of $3.4 million or $0.08 per basic and diluted share. This compares to a Q4 2021 net income of $4.2 million or $0.10 per share. On a non-GAAP basis, which is adjusted to remove the impact of stock-based compensation expense. We reported a net loss of $0.3 million or $0.01 per basic and diluted share for the first quarter of 2022. Gross revenue from NERLYNX sales was $51.5 million in Q1 2022 versus $64.5 million in Q4 2021. As Alan mentioned, net product revenue from NERLYNX sales was $40.7 million compared to the $51 million we reported in the fourth quarter of 2021. We believe that Q1 net sales included approximately $4.3 million of inventory drawdown from our distributors. Royalty revenue totaled $5 million in the first quarter of 2022, an increase from $2.9 million in Q4 2021. Our gross to net adjustment in Q1 2022 was 21%, flat from the gross to net adjustment in Q4 2021. We increases to coverage GAAP and co-pay charges were offset by decreases in Medicaid expenses to keep our quarter-over-quarter gross to net flat. Cost of sales for Q1 2022 was $10.8 million, including $2 million for the amortization of intangible assets related to our neratinib license. Cost of sales for Q4 2021 was $11.9 million. Going forward, we…

Thanks, Maximo. During 2020 and 2021, the COVID-19 pandemic presented significant commercial challenges to Puma and presented significant barriers to commercial access for Puma's commercial team. We are hopeful that with COVID cases declining and vaccination and booster rates increasing, these barriers will reduce in the future, 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. We also recognize the uncertainty as to when access to health care providers will improve, and we are remaining conservative in our outlooks for improvements in access for this year. Puma senior management in cooperation with the Board of Directors continues to remain focused on improving NERLYNX sales in 2022 and beyond. For the fourth quarter of 2021, we implemented a reduction in expenses with the goal of reducing expenses in order to maximize operating cash flows. The company remains committed to protecting these operational cash flows and will continue to reduce expenses if needed to achieve this. 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 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. Operator?

[Operator Instructions] We'll take our first question from Ed White with H.C. Wainwright.

Good afternoon, thanks for taking my questions. Just a couple of questions on the sales force. You had mentioned that 60% of your calls are live. Can you give us some background about where that -- what the change has been over the last quarter? And perhaps did you see a change from January to March?

Yes. Ed, sure. Happy to do that. The short answer to both is yes. We saw a larger percent of live calls in Q1 versus Q4. So we saw improvement there. January was slightly better than December, but February and March, we saw a fairly significant and steady improvement on live versus virtual. So we've seen that trend continue actually throughout the quarter.

And do you have any data showing that live is better than virtual as far as the account penetration is concerned?

So I've seen a couple of things. Feedback from the field certainly is that the live interactions are deemed to be more valuable. We've also seen market research from ZS that says the sort of fatigued virtual calls across the industry has started to weigh in. And so we qualitatively and quantitatively believe that live calls are better. It's giving us more time in front of customers as well.

And Ed, if I can add to that. I think the other aspect with Live calls is that oftentimes, the rep is going into a practice that's got multiple physicians and multiple HCPs there as well as nurses and other things. When they're live, they get the opportunity to interact with lots of people, whereas on a virtual call, it's just going to be one-on-one with the health care provider, the nurse or something like that. So in a live situation, we kind of refer to it as the total office call being able to speak to as many people in the office as possible. You obviously have more of an opportunity for that.

Okay. Thanks, Alan. And last question, just you had mentioned that the distribution network is sitting at on about 4 weeks of inventory currently. Do you expect that to remain stable? Or should we see a change perhaps down to 3% or up to 5% at some point?

Ed, we do see some fluctuations in our inventory levels, but that level is about normal. We don't expect it to be significantly different than that. As we mentioned in the call, we saw a fairly significant inventory build in the fourth quarter. We subsequently saw that decline largely early on in the first quarter, and it's now, for the most part, stabilized week-over-week. So we think that's a fairly good inventory estimate at this time.

Yes, to put a few more numbers behind it. In the fourth quarter, we said that the inventory build was about 345 bottles. We saw that work down by 282 bottles in Q1. So there's still a little bit -- they're still in there, not huge, looks like around 50 or 60 bottles or so. My anticipation would be that, that might get fully worked down over Q2 and Q3. And then again, in Q4, we would expect to see an inventory build like we see every year. So that would be kind of the what I would expect for the future quarters.

Thanks. And if I could sneak in one last question. Can you make any comments on duration that the patients are staying on drug. How is it looking for the number of bottles per patient?

And we do track duration of therapy. And what you see with NERLYNX is that first refill is really important. If we can get patients through that first refill, that first second month on drug into that second month in drug, the discontinuation rates drop off, which is what we're trying to achieve here. We certainly believe that with the increase of dose escalation, we will see more second fills or the first refill. The bulk of our patients on dose escalation, as you look at our slide, really has occurred in the last 3, 6, 9 months. We see that bolus above 50%. We are tracking those cohorts. I don't have any updated data to quantify that yet. But what I can tell you is in dealing with customers, the feedback from customers on dose escalation is that it's much easier for patients, much easier for the practice, much easier for physicians. We've also seen that physicians that adopt dose escalation are more likely to treat additional patients with NERLYNX as well. Hopefully, that helps some.

That does. Thanks so much for taking my questions.

You're welcome.

We'll take our next question from Yigal Nochomovitz with Citi.

This is Ashiq Mubarack [ph], on for Yigal. Thanks for taking my question. I apologize if I missed this in your prepared remarks, I was hopping between calls. But can you help level set for your upcoming ASCO data for the Summit cohorts? Maybe any color on how many patients' level of detail level of follow-up that you'll present for both the HER2 mutant breast and biliary tract cancer presentations.

Yes. So in terms of the HER2 mutant breast, I believe it would be the additional 18 patients that have been enrolled since we last updated. And then on the biliary, I apologize, I don't remember the number off the top of my head, but it would be the full cohorts that will be presented. And in terms of the data, I would expect to see the standard response rates, PFS and things like that.

Okay. Then maybe I'll sneak in one more follow-up. I know you've been weighing FDA discussions related to the potential for accelerated approval in HER2-mutant breast and EGFR exon 18 lung. Do you have any updated thoughts on how you've been weighing that ROI in terms of maybe the need to run additional studies, I'm just curious what your latest thoughts are?

Well, yes, I think we have all seen that the FDA seems to be a little more reticent to allow accelerated approvals on single-arm data. They just had the recent panel -- the ODAC panel discussion on that whole topic. And so I think there's certainly risk to that, given the way the FDA appears to be communicating things. We obviously won't know until we speak with them and until we analyze all the data as well. So we really don't know. Now in terms of kind of the risk benefit and ROI of doing that, if we're going to start a randomized trial in 2003, assuming the full 3 years for that trial to go forward, you're talking about probably 2026, getting that data for an approval in 2027 and our composition of matter patent expires in 2030. So that would be the calculations we would be using to determine the ROI on that.

We'll take our next question from [indiscernible] with Cowen & Company. The floor is yours.

This is Divya on for Mark. I just have two. One is on the commercial side, but do you have a sense for the sort of breakdown in terms of payer distribution between the commercial and maybe government or Medicare-based plans? And then, just another question on just the revenue breakdown based on your guidance. It looks like for the first half of the year, we're looking at like about $87 million at the upper end and then about an 18% increase in H2. Do you have any color on kind of the assumptions you're making for that increase in H2 would be helpful.

Thanks for the questions. I'll take the first question you had on payer mix. And obviously, our payer mix does fluctuate, but let me give you a general color. We have about 65% of our business is commercial payers. I would say about 23% or so, 24% is government, Medicare, Medicaid, VA, DoD. And then we do have certainly about 10% or so that is either other or uninsured that does not include any acknowledgment of insurance coverage.

And then on your second question, which is the revenue breakdown, our assumption is that you will see a slight growth in terms of the Q2 to Q3 with the bulk of that growth being Q3 to Q4.

Okay, that's helpful. Thank you.

And then as we mentioned, we're expecting to be slightly net income positive in Q2.

And for our next question, we'll move to Geoff Meacham with Bank of America. Please proceed.

Hi, this is Alex Hammond on for Jeff Meacham. Thank you for taking our questions. Can you talk about your expectations from the Cohort 4 B and 4 C, of the Phase II trial of the combination of Kadcyla plus neratinib in patients with HER2-positive breast cancer and brain metastases who have been previously treated with Kadcyla. Thank you so much.

Yes. So this is on TBCRC 022, which is our trial of neratinib in patients with brain mets. So as you correctly point out, there are 2 cohorts. One of them is neratinib plus Kadcyla in patients who are Kadcyla-naive, the other is neratinib plus Kadcyla in patients who have already seen Kadcyla. So this is going to be a very interesting data because it's going to be very applicable to the current treatment paradigm for HER2-positive breast cancer with brain mets because you are certainly seeing patients who've previously seen Kadcyla either in the adjuvant setting or in the metastatic setting and then have brain mets. And then you're also seeing patients where they did not have Kadcyla, either adjuvant or metastatic and perhaps got Tukysa as their first treatment and therefore, they're Kadcyla naive. So our expectation would be that we would see -- I don't remember the number of patients off the top of my head. I'm guessing it's somewhere around 20, 25-ish where we would see the response rates in PFS in both of those cohorts I do believe we will see patients who've previously been treated with Tukysa as well. So I think it's going to be a very real world applicable. And remember that neratinib is in the NCCN guidelines for brain mets. So if indeed, the data is positive, we would have the opportunity to potentially submit it to the NCCN for inclusion, which would allow physicians to be able to utilize it if they so wished.

Thank you.

And for our next question, we'll turn the floor over to Gena Wang with Barclays.

This is Sheldon [ph] on for Gena. Maybe one on the exon 18 mutation non-small cell lung cancer cohort that's expected in second half of this year. So you mentioned that you have 31 patients enrolled. Could you comment on how many of those patients have passed TKI failure. So I suppose that will be the ultimate cohorts that will support the FDA approval, right?

Yes, correct. So from a registrational perspective, it would be -- that we would be focusing on the patients who have already seen an EGFR TKI. So the exon 18 mutations when they're naive to an EGFR TKI tend to be responsive to a first-line TKI and that can be the first-generation drugs. So gefitinib and erlotinib. Or can be the second-generation drugs like afatinib and osimertinib. My understanding is, I think those 30 patients, the large majority of them have already seen a TKI because that was where we had focused the development of the drug. So I would envision that the large majority of them have indeed failed in EGFR-TKI.

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

Thank you for joining us today. 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, and you may now disconnect.