Puma investors fret, as Nerlynx Q1 sales fall uncomfortably short of Wall Street estimates
“We are not pleased with our first-quarter Nerlynx revenues,” Puma Biotechnology chief Alan Auerbach said in a post-earnings conference call on Thursday, citing a spate of disconcerting factors, including patient discontinuations. Investors concurred with his assessment, as the stock $PBYI cratered. The disdain continued early Friday, as shares fell nearly 37% to $18.96 before the bell.
The drug, which was in-licensed by Puma from Pfizer $PFE, was approved by the FDA in July 2017, to prevent breast cancer relapse, following therapy in patients with HER2-positive cancer. The treatment is known to have a poor tolerability profile, predominantly relating to diarrhea. The Los Angeles-based company posted Q1 Nerlynx sales of $45.6 million — a 25% decline quarter-over-quarter — and well below Street consensus expectations of about $67 million.
“The discontinuations occur more frequently in the first month. While most physicians prescribe an anti-diarrheal medication with Nerlynx, our research shows that some patients may not fill the anti-diarrheal prescription. There were also some physicians not prescribing any anti-diarrheal prophylaxis medications at all, which we believe was due to the lack of awareness of the data from our control trial using prophylactic anti-diarrheal drugs,” Puma CCO Steven Lo said on the call.
Other reasons for the sales miss were attributed to: patient discontinuations owing to the progression of the disease, or loss of insurance; an abnormally high vacancy rate in the sales force, with 18 of 80 sales territories enduring turnover during the quarter; and patients completing one year of treatment on Nerlynx as indicated on the label.
“The negative impact from treatment discontinuations directly related to Nerlynx’s challenging tolerability profile, which has seemingly had a relapsing/remitting impact on quarterly commercial results, was explicitly described as worse than expected – increasingly sequentially…Definitely more disconcerting, however, was the revelation that at certain periods during the quarter, the company’s “higher than average vacancy rate in (their) sales force” with 18 of 80, or 22% of sales territories ‘not having a sales rep at some point in the quarter.’ While seats have apparently been mostly re-filled…this scenario raises concerns regarding the sustainability of the apparent rebound seen in April (2Q to date). However, the subdued tone with which commentary was delivered, makes it challenging to muster confidence that commercial dynamics can achieve even lowered full-year 2019 Nerlynx sales guidance,” Cowen analysts wrote in a note.
SVB Leerink analysts lowered their 2019 US revenue estimates to $221 million from $265 million and tempered their peak US sales expectations to about $369 million from $400 million.
After successfully lobbying European regulators to have a change of heart and approve Nerlynx last year, Puma palmed off the treatment to Pierre Fabre — its sixth marketing partner —with the United States and Japan as the only remaining unencumbered major markets.