Good afternoon. My name is Melinda, and I will be your conference operator today. At this time all participants are in a listen-only mode. After the speakers formal remarks there will be a question-and-answer session. [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, Melinda. Good afternoon, and welcome to Puma's conference call to discuss our financial results for the third 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 third quarter 2021 financial results. That news release, the slides that Jeff will refer to and a webcast of this call are accessible via the home page 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 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, November 4, 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 third 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 third quarter of 2021 of $46.2 million. Total Revenue includes product revenue net, which consists entirely of US NERLYNX sales, as well as license fees and royalties from our sublicensees. Products revenue net was 43.4 million in third quarter of 2021, representing declines from the 48.9 million and product revenue net reported in the second quarter of 2021 and 49.3 million in product revenue reported in Q3 of 2020. Product revenue for the quarter was negatively impacted by approximately $3.5 billion due to inventory reduction at our specialty pharmacies and specialty distributors. Royalty revenue was 2.8 million in the third quarter of 2021 versus 4.3 million in Q2 of 2021 and 1.5 million in Q3 of 2020. During the third quarter of 2021, we continued to experience challenges brought on as a result of the COVID-19 pandemic and the Delta variants. As Jeff will show in his presentation, we are reported 2947 bottles of NERLYNX sold in the third quarter, versus the 3354 bottles sold in Q2 of 2021. Bottle sales in the quarter were negatively impacted by the inventory reduction and our specialty pharmacies and specialty distributors mentioned earlier. Jeff will provide further details in his comments and slides. Due to the access limitations presented by COVID-19 call activity to physicians declined approximately 10.5% in Q3 compared to Q2. New prescriptions were up 2.9% in Q3 compared to Q2, while total prescriptions were down 3.1%. Bottles sold through our specialty distributor network which we also refer to as our in office network were down 11.9% in Q3 Compared to Q2. I will now provide a clinical review of the quarter and then Jeff Ludwig will add additional color on the…

Thanks, Alan. Appreciate it. And thanks to everyone for joining our third quarter earnings call. Before I move into the commercial review, just a reminder that I will be making forward-looking statements. In our second quarter earnings call we announced a quarter-over-quarter increase in net sales and ex-factory bottles. Our goal was and still is to deliver consistent quarter-over-quarter growth, which we were not able to achieve in Q3. Our ability to deliver consistent growth was largely based on two key assumptions. Number one, the positive evolving clinical profile of NERLYNX and two, an improvement in call activity and access driven by an increase in vaccinations and the loosening of customer restrictions. As I reflect upon our Q3 performance, I continue to feel very strongly about the evolving clinical data, and its ability to shape and change the risk benefit perceptions of NERLYNX in this underpenetrated market. The assumption that has caused us the biggest challenge is customer access, and overall declining HCP call activity. As Alan mentioned earlier, we saw about a 10% reduction in overall HCP calls in Q3 versus Q2. Now, HCP access and engagement is critical when you're trying to reposition a brand and share new evolving clinical data. Given the importance of this leading indicator, let me provide some additional insight. As I compare our pre-COVID HCP engagement with our current activity, we're still down overall about 40%. We do expect that access caused by COVID restrictions will improve in the future. But given the uncertainty of the pandemic we are focused on increasing HCP activity through both personnel and non-personnel promotion. With that high level update, let me transition to some of the US commercial slides and I will provide some additional insights along the way. Once I have finished my remarks, I will…

Thanks, Jeff. I will begin with a brief summary of our financial results for the third quarter of 2021. Please note that I will make comparisons to Q2 2021, which we believe is a better indication 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 include our consolidated financial statements. For the third quarter of 2021, we reported a net loss based on GAAP 44.7 million and $1.09 per share. In Q2 2021, we reported a net loss of 5.1 million. On a non-GAAP basis, which is adjusted to remove the impact of stock based compensation, we reported a net loss of 40.4 million or $0.99 per share for the third quarter of 2021. Gross revenue from NERLYNX sales was 53.8 million in Q3 2021 versus 59.3 million in Q2 2021. As Alan mentioned it, net product revenue from NERLYNX sales was 43.4 million compared to the 48.9 million we reported in the second quarter of 2021. Royalty revenue totaled 2.9 million in the third quarter of 2021 versus 4.3 million in Q2 2021. Our gross net adjustment in Q3 2021 was about 19.4%, an increase from the 17.7% gross net adjustment in Q2 2021. The increase was driven by primarily by higher Medicare rebates. Cost of sales for the Q3 2021 was 10.3 million, including 2 million for the amortization of intangible assets related to our neratinib license. Cost of sales for Q2 2021 was 12 million. Going forward, we will continue to recognize amortization of milestones to the licensor for about 2 million per quarter as cost of sales. For fiscal year 2021, Puma anticipates that the net product revenue will be in the range of 180 million to 182…

Thanks, Maximo. The COVID-19 pandemic has continued to present commercial challenges to Puma. However, we are hopeful that with the vaccinations that have been occurring in 2021 and will continue to occur throughout the year, it will reduce these barriers in the future, which should improve the ability of our commercial team to access and interact with healthcare providers to increase their awareness of the NERLNX data. We also recognize the uncertainty as to when access to healthcare providers will improve, and we are remaining conservative in our outlook for improvement and access for the remainder of the year. Former senior management in cooperation with the Board of Directors continues to remain focused on NERLYNX revenue and sales growth for 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. Operator?

We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Yigal Nochomovitz with Citi. Proceed with your question.

Hi, this is Carly on for Yigal. Thank you for taking our questions. We have two questions. First, we're just hoping you could elaborate further on the rationale for sort of restructuring within the commercial organization and sort of how specifically the overall commercial strategy is shifting as a result of these changes. And then the second question is on 2022 and sort of as the pandemic eases, how you're thinking about the revenue trajectory heading into next year. Thanks so much.

Hi, Carly. Thanks for the questions. Jeff, would you like to handle those.

Sure. Let me talk through the restructuring of the organization on the commercial side. We talked a lot about share voice. And let me just talk about share voice in a broader sense, our share voice has not been restricted because of the number of people we have in the field. But it's really been restricted because of the changes in access largely due to COVID. So in our previous structure, we essentially had excess capacity. And regardless of how hard we tried to change and adjust, we were just not able to efficiently use that capacity or those resources. Looking at a little more granular, we definitely see accounts that have restricted access to the industry. And in those cases, as you can guess it typically does not make sense to deploy resources the same way. It's an inefficient utilization of headcount. The continuing trend in oncology has been toward more restrictions versus less restriction. With that said, we do expect access restrictions caused by COVID to improve in the future. But the timing is uncertain. But ultimately, we're going to see some accounts continue to restrict access, others are going to open back up to a more hybrid situation, virtual and live, as you can guess you can be more efficient with resources there. And there'll be something opened up fully. And that's the ones we like. Our new structure should allow us to increase call activity from our current levels. And we believe we can be more effective with better targeting evolve in our evolving clinical data. And also with the reduced layers of management, we think we can execute in a more efficient and effective manner. I will end though by looking at Alan across the table for me that if we get to a position where we're not able to fully engage the customers the way we want from a capacity standpoint, I can make a very simple business case, and we can adapt very, very quickly moving forward.

We're certainly recognizing the challenges for our reps to interact with healthcare providers. And as Jeff had said, if we compare kind of our HCP calls separating with pre-COVID it's down about 40%. So if you want to kind of look at it as a quantitative aspect of the cost per rep that number is down 40%. So what we're kind of doing here is putting our calls per rep back to where it was pre-COVID by just reducing the number of reps. And just is absolutely right, if we see in 2022, that things are opening up and there is a need to add reps and go back to what we have previously, we're happy to do so. It's just we're recognizing the need to be fiscally responsible to the shareholders of the company. And if we see the need to grow, that's fine. It's just given the limited access. It just doesn't make sense to have that infrastructure right now.

Carly, one other comment here, which is, we are building out a strategic accounts, team and capability which we previously really haven't had. And we think it's really important that we'll be able to better align with some of our largest most important customers going forward. And clearly a large potential or large part of the opportunity resides with those customers. So we see that as a better way of moving forward as well.

And then do you want to handle the piece on 2022?

Carla, can you repeat that question? I'm sorry, I missed the second part of that question.

Yeah. No problem. I was just asking about 2022 and just preliminary thoughts on sort of the revenue trajectory into next year.

So I don't know that we've reduced, we've we publicly stated anything about 2022 revenue expectations. But obviously, I'm hoping that we can put - we can leverage the new data that we have, the evolving clinical data. We're hoping that this new organizational structure will play out to be more efficient and effective. And obviously, we're working very hard to increase our call activity and engagement with customers. The goal is to drive growth, and that's what we're continuing to try to do.

And Carly, in terms of potential new opportunities for revenue. Obviously, the mutations would be one in terms of interesting awareness in those. And the other is we have ongoing trial, which is the TBCRC 022, which is looking at neratinib in patients with brain mets in combination with Kadcyla. We're looking for that data to be presented sometime in the first half of 2022, my guess would be ASCO. And certainly due to the huge unmet medical need, in HER2-positive breast cancer for patients with brain mets and we're already in the NCCN guidelines for brain mets, there's a possibility you're going to see uptake of NERLYNX there.

Got it. That's helpful. Thank you for taking the question.

Your next question comes from Marc Frahm with Cowen. Please proceed with your question.

Yes, thanks for taking my question. One clarification just on the headcount reductions in the sales force. You said the footprint would be down 40%. Is that just headcounts down 40%? Should we also expect expenses to be 40%? Or kind of one-to-one relationship there or is there a little bit of a disconnect? And then I think also in your comments, you mentioned the OpEx will go down not just for SG&A but also R&D, can you quantify that at all?

Yeah, so in terms of Jeff's comment on the 40%, the headcount would be commercial individuals that he was talking about being down 40%. In terms of the expenses that won't be down 40%. Maximo, do you want to give some guidance on that?

Yeah. Our expectation is quarter-over-quarter. So Q4 versus Q3 expenses will go down 10%, operating expenses in total.

And Marc, so R&D expenses will go down just because we don't have a lot of trials ending, but also, the way our reporting structure is, the way we record expenses, the medical affairs department, which is technically commercial, their expenses get reported through research and development. So although it's a commercial group, just the way it's structured, their expenses come in through research and development.

Okay, great. That's helpful. And then I'm guessing there's often some onetime charges in there, should that - is that 10% reduction in Q4 likely to increase a bit more as we get into 2022. And the onetime charges are in the results as well.

We're not aware of any one time charges for 2022. So from an R&D perspective, we had them - we had ones like, Maximo said in the last quarter, the biggest of which was payment to the licensor. We had payment to Pfizer for European approval. That's the main one.

Was one time charges associated with the resizing the sales force.

With the restructuring, yeah, Marc.

Yeah. So the onetime charges that we expect is about 1.2 million for the quarter. So that's included in our SG&A.

Okay, that that's helpful, and then maybe from a data perspective. Alan, thanks for the review of the design of the HER2 mutation study in breast cancer. And the analysis that was done on the first seven patients within the Simon 2-stage design, is that the exact data set that we will see at San Antonio Breast? Or do we effect a more updated dataset with potentially more follow up on those patients and maybe even some additional patients since this trials continued?

Yeah, that is a good question. I do not know the answer to that right now. Yeah, I apologize. My memory isn't as good as it once was. I recently saw that presentation and I don't - I know it was the seven patients from the triplet arm. And the updated follow up on them. I don't know if we - like the patients enrolled post randomization, I don't know if there'll be part of that. It's a poster presentation. And that's public information but it's a poster presentation. I don't know that - I don't remember if we're going to put in the ones from post randomization. So I apologize I don't have that right now.

Okay. No worries, like trials keep track of. Thanks very much for answering the questions.

Your next question comes from - I apologize, it looks like we have Paul Choi with Goldman Sachs. Please proceed with your question.

Hi, this is Kate on for Paul. Thank you for taking our questions. We have two of them. First, for the EGFR lung study, what additional data will the FDA require beyond the SUMMIT data to support an accelerated approval? And then second, what sort of feedback have you gotten from physicians regarding the new dose escalation regimen? Thank you.

So let me take the first one. In terms of EGFR lung, we are specifically looking at patients with exon 18 mutated, exon 18 EGFR mutated lung cancer who have already failed, and EGFR TKI. To answer your question, what will the FDA require? I don't think we know the answer to that right now, because we've not had a discussion with them post the data, if you will, to know what they would require. I imagine, I think we have in our milestones that we're going to plan a meeting with the FDA to discuss that. My speculation would be that we have certainly seen a lot of these rare mutations in lung that the FDA has required a single arm trial. I think, if I remember correctly, it's usually around 50 or 100 patients or so. I would assume the data from SUMMIT would suffice for that. So we could just expand it to that. That would be my assumption. I don't have any concrete words from FDA on that. The trial has been enrolling very well, I think we're close to like 30 patients in that arm already. So we're well on our way. I just don't have - I can't give you any feedback, because we even had that specific discussion with the FDA. On your second question on the dose escalation, I will answer and Jeff you can add in. With the universal feedback we have got has been very favorable. They definitely have said that it makes a notable difference in the grade three diarrhea rate, and also the overall tolerability of it. And I would say we continue to hear very, very positive feedback on that. Jeff, would you like to add.

Yeah. Alan, I'll try not to be redundant you. I would say the same thing Kate. We've seen very good feedback from customers. The evidence really is this significant uptick we saw in Q3, and as you can guess, that is a blended number for all of Q3. So we continue to see weekly and monthly, very nice uptick of dose escalation, that data is based off of the control data. And that's why the FDA approved it that showed the greater than 60% reduction in grade three diarrhea and greater than 80% reduction in discontinuations. Customers believe in that data, they're seeing early feedback that is very positive as they treat patients. It's helping the nursing staff as well. And we think ultimately, it will help patient stay on drug and get the full benefit of NERLYNX, which we obviously believe is very important to us.

Awesome, thank you so much.

Thank you.

Your next question comes from Geoff Meacham with Bank of America. Please proceed with your question.

Hi, this is Alex on for Geoff Meacham. Thank you for taking our question. So our first one is when you look at the commercial access disruptions caused by COVID, how do you see the script potentially recovering once the pandemic subsides? I think it'll be a spike quarter-over-quarter or do you think it'll be maybe something a little bit more gradual? And the second one is any color that you can provide on the global partner launches during the quarter in terms of feedback you've been receiving in the field. So those are my two. Thank you.

Yeah. Jeff would like to answer both those questions?

Sure. Let me give it a shot. So Alex, I think the first comment is, let me be go on record to say that I've been wrong on COVID every step of the way, we've been in the ebbs and flows and spikes along the way. So that's been challenging. But as we've seen COVID across the country, what we see is pockets and spikes, we see some loosening of restrictions some go in the other direction. So everything that we're counting on in our forecast is that we're going to see a slow, steady, hopefully reduction in COVID cases and a slow, steady increase in access. That's what we would count on, we obviously would hope for a much greater spike. But that's just not what we've been seeing as we've monitored over the last 17 months here.

And if I can just add to that real quick, Alex. I think we were optimistic early in 2021 that with vaccinations and COVID numbers dropping that we would start to see access improving. And as Jeff said, we're wrong, we just have not yet seen that. At some juncture, I think we will, it's just very hard to predict when that will be. And Jeff, do you want to answer the one on the global partner?

Yeah, Alex, obviously, we're - as we mentioned in the upfront comments, we're very pleased with the partnership. Our global partners, they're doing a nice job of moving NERLYNX to regulatory approval and launches. We're excited that NERLLYNX was launched in Peru just recently. We expect it to be launched for metastatic in Taiwan soon. And as I stated, we're excited to see what happens in Mexico and Brazil. The initial launches, from the customers on the ground has been positive, there's unmet need across the globe. And we think NERLYNX fills a nice niche unmet need. So we're seeing some nice, slow, steady uptick that is important to us.

Yeah. And Alex, I can add to that. We've been very lucky to have some really great partners. Our largest, which is Pierre Fabre, who's been doing a wonderful job of it, and we've been very pleased with their execution.

Great, thank you so much.

Your next question comes from Gena Wang with Barclays. Please proceed with your question.

Hi, this is Sheldon on for Gena. Thanks for taking our questions. Maybe one on the TBCRC Kadcyla combo data. So this is in brain mets patient population and what type of impulse would you presents? And could you talk about the benchmark and recorded path and also your thoughts on the future of commercial landscaping to this indication given that ran out other drugs in the second and third line also showed pretty strong activity in the CNS. Thanks.

Yeah. Let me take that question. So the TBCRC 022 trial is a trial that originated with Pfizer. When we licensed the drug we took it on and we have expanded it. The trial originally was getting random alone in patients with HER2-positive of metastatic breast cancer that had brain mets. We expanded it to look at the combination with capecitabine which is XELODA. And then we expanded again to look to combination with Kadcyla. The reason we were looking at combination with Kadcyla is that the preclinical data shows that neratinib being an irreversible HER2 inhibitor, ends up increasing internalization of the HER2 receptor. So you end up bringing more of the - when you combine with an ADC you end up bringing more of the ADC inside the cell. And so you have kind of a synergistic effect. We have a trial of that combination, neratinib plus Kadcyla called FB-10, which we reported at ASCO, a 60% response rate, which was much rather we expected, which we believe is a testament to that. In terms of the patients in TBCRC 022. These are all patients with HER2-positive breast cancer with brain mets. It's been - again, it's neratinib with Kadcyla and there are two cohorts of patients. One, are the patients who have previously been treated with Kadcyla. The second is the patients who have not been previously treated with Kadcyla. My understanding from the investigators is it is likely both of those cohorts will be reporting out most likely at ASCO next year. Because of the timing of when the trial has been going, I would expect we would also have a number of patients in the trial who've been treated with some of the newer agents, like in HER2 or Tukysa. In terms of what I would say is the benchmark, you're looking at patients who are late stage failed other existing therapies. There's really no treatment for these patients because other than Tukysa, I don't think there's any drug that actually has HER2-positive metastatic breast cancer with brain mets in their label or even has much data on it. I would say anything north of a 20% response rate, I think would be viewed as encouraging. I don't know that we're looking to go run a large Phase III trial in this indication, but we would certainly look to try to submit it to the NCCN guidelines. As you're aware, neratinib is already in the NCCN guidelines for brain mets. So I think we would look to update those guidelines with this new data.

That's very helpful. Thanks.

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

Thank you for your interest in Puma Biotechnology. 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 call. This concludes our program. Everyone have a great day. You may now disconnect.