Puma shares ripped after growing grade 3 diarrhea threat is highlighted in an abstract

Simos Simeonidis, RBC Capital

Simos Simeonidis, RBC Capital

The skeptics ripped into Puma Biotechnology $PBYI today, tearing a 20% chunk out of its share price by early afternoon on Monday after getting a glimpse of its lead cancer drug’s continuing problems spurring severe cases of diarrhea in patients.

The reaction quickly set in after Puma posted an abstract for an upcoming cancer symposium which spelled out the increasing rates in neratinib trials. RBC’s Simos Simeonidis sat down to compare the numbers, and reached a few unsettling conclusions. Here’s a note he posted Monday afternoon:

In an abstract released this morning, Puma disclosed data from the Phase II CONTROL trial in the extended adjuvant setting showing that treatment with loperamide helps lower the ~40% Grade 3 (G3) diarrhea seen in the ExteNET Phase III trial. However, the numbers released today show that the G3 rates went up compared to what was disclosed last year… Specifically, in patients in the original loperamide protocol, the rate of G3 diarrhea increased to 21.4% from 18.5%. Furthermore, in the amended protocol arm, the amount of G3 diarrhea more than doubled from 13% to 28.6%. Overall, the blended rate between these two arms was 27.1% vs. 16% last year.

The company had recently disclosed they had added a new arm to the study, combining the corticosteroid budesonide to help with the prophylaxis regimen. Today’s release of the worsening (vs. last year’s data) diarrhea, helps explain the need for this change in the trial. While we view the 12.5% rate of G3 diarrhea as potentially promising, we point to the small n (16 patients) and to the fact that these data are still early (i.e. it is possible that they actually get worse over time, just as the data from arms 1 and 2 did). The update in San Antonio should have slightly more mature data; however, we view the fact that loperamide alone no longer appears sufficient to prophylaxe against severe diarrhea as a significant negative for neratinib and the stock.

One key point here: Simeonidis has been cautious but positive about neratinib’s prospects as a new treatment for breast cancer as it undergoes scrutiny at the FDA. Datasets on 5-year survival and loperamide prophylaxis had improved sentiment around the company’s chances, he noted last September 20, when the FDA accepted Puma’s application for review.

The bear position on Puma is that the drug could be too toxic even for the FDA, which has proven willing to put up with significant threats for drugs initially aimed at dying patients. Bulls believe that the safety bar is low enough to clear.

Investors were way ahead of Simeonidis today, driving down the company stock as Twitter quickly spread the word to anyone who hadn’t heard already.

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Recursion Pharmaceuticals Salt Lake City, UT
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